(Reuters) – GTT Communications Inc on Wednesday obtained court approval to proceed with its Chapter 11 fast-track process, which is expected to reduce its debt by $ 2.8 billion.
U.S. bankruptcy judge Michael Wiles in Manhattan approved the global cloud service provider’s request for access to cash to fund operations in his Chapter 11 case and has set a December 15 hearing on its draft plan to reorganization. The bankruptcy comes about six weeks after the Virginia-based company sold its infrastructure business to private equity firm I Squared Capital for $ 2.1 billion.
GTT, represented by Akin Gump Strauss Hauer & Feld, filed for New Mexico Bankruptcy on Oct. 31 with a preconceived plan backed by 88% of its major noteholders and lenders after nearly a year of negotiations. None of GTT’s foreign subsidiaries is debtor in the Chapter 11 matter.
The company attributed its financial difficulties to problems with its acquisitions of businesses with infrastructure systems in recent years. In addition, GTT incurred significant debt to finance one of these transactions, according to court documents. GTT sold three transatlantic submarine cables between Europe and North America and a large fiber optic network in Europe to I Squared Capital as part of the September sale.
The company reported total liabilities of $ 4.1 billion, including $ 1.4 billion in secured debt.
In addition to approving GTT’s access to the lender’s cash on Wednesday to fund operations, Wiles also authorized the company to continue paying employee salaries, among other operational matters.
The case is In re GTT Communications, US Bankruptcy Court, Southern District of New York, No. 21-11880.
For GTT: Ira Dizengoff, Philip Dublin, David Botter and Naomi Moss of Akin Gump Strauss Hauer & Feld
For Lenders: Evan Fleck of Milbank
For Noteholders: Richard Levy of Latham & Watkins
GTT sells its infrastructure unit to I Squared for $ 2.15 billion