Bloomberg has the story on the bankruptcy of Global Capacity.
Global Capacity Files in Delaware for Debt Conversion
Capital Growth Systems Inc., known as Global Capacity, filed a Chapter 11 petition on July 23 in Delaware to convert debt into equity.
The Chicago-based provider of systems to integrate networks had revenue of $64.4 million in 2009, resulting in a $52.8 million net loss including $12.5 million in charges for impairment of goodwill. The first quarter of 2010 resulted in a $2 million loss on revenue of $14.7 million. Revenue in the quarter declined 10 percent from the same period in 2009.
Debt includes $5.2 million on a senior secured loan owing to Pivotal Global Capacity LLC. There is another $38 million on several issues of secured subordinated convertible debt, $4 million in unsecured notes, and $15 million owing to utilities.
The company said in a court filing that there is an agreement on a reorganization plan with Downtown Capital and some debenture holders who also will supply financing for the Chapter 11 case.
The company said it filed in Chapter 11 when out-of-court negotiations over 14 months were "unsuccessful."
The case is In re Global Capacity Holdco LLC, 10-12302, U.S. Bankruptcy Court, District of Delaware (Wilmington).
BTW, the full list of companies involved are as follows: "Global Capacity Holdco, LLC, Global Capacity Group, Inc., 20/20 Technologies, Inc., Centrepath, Inc., Capital Growth Systems, Inc., Global Capacity Direct, LLC (f/k/a Vanco Direct USA, LLC), FNS 2007, Inc. (fka Frontrunner Network Systems, Corp.), Nexvu Technologies, LLC, Capital Growth Acquisition, Inc., and 20/20 Technologies I, LLC. It's never simple in telecom.
List of creditors is here in pdf. They owe a Chicago law firm about $750K.
Fancy talk, but GCG was just a reseller of circuits. At least, that is how I know of them. I was one of their agents. And I'm staring at the BK papers in my hand. GCG owed AT&T $4 million. Cogent, Global Crossing, Level3, BCE, HGC, Qwest, Verizon Business ($2M), XO and Via West were all owed money.
