Windstream Holdings' bankruptcy filing on Monday has prompted a lot of questions about what it will mean for customers, employees and even retirees of the telecommunications company.
Windstream, based in Little Rock, Arkansas, filed Chapter 11 bankruptcy after losing a federal court battle earlier this month with Aurelius Capital Management.
Aurelius argued in court that Windstream's 2015 spinoff of its fiber-optic cable network violated the covenants on one of its bonds.
Windstream created a separate company, called Uniti, to hold its communications infrastructure and then leased those assets back to Windstream.
At the time of the spinoff, all of Windstream's bondholders OK'd the deal. However, Aurelius later bought one of the bonds that it believed had covenants that specifically prohibited a "sale-leaseback" arrangement.
Aurelius took the matter to court, and Windstream chose not to try to settle the lawsuit, explaining on a website it set up for bankruptcy questions that it believes Aurelius engaged in "market manipulation to advance its own financial position through credit default swaps at the expense of our company and our stakeholders."
"We believe settling would have meant that Windstream was complicit in Aurelius’ tactics -- and we were not prepared to do that."
By not settling and losing in court, however, Windstream put itself in a precarious financial situation.
While a $310 million verdict is substantial -- representing nearly a quarter of the company's annual revenue -- the court's ruling that it had technically defaulted on the debt was more devastating. It put Windstream into default on its other debt and also imperiled its access to credit to fund its daily operations.
That left Chapter 11 bankruptcy as the only choice to ensure Windstream could meet its day-to-day financial obligations.
The bankruptcy filing has inevitably led to questions about the future of the company that serves more than 100,000 customers in Lincoln and Southeast Nebraska.
"Windstream is continuing to operate as usual throughout the Chapter 11 process and will continue serving our customers," Scott Morris, a company spokesman, said in an email.
On Tuesday, the company received approval from the bankruptcy court to access up to $400 million in financing and to continue the normal operation of its businesses.
Windstream has more than 200 employees in Nebraska, including more than 150 in Lincoln. The company said no layoffs are planned in connection to the bankruptcy filing.
The Communications Workers of America, which represents more than 1,200 Windstream workers, including some in Nebraska, said on Monday that it had retained legal counsel "to help protect the interests of our members and retirees."
Retirees, of which there are many locally who worked either for Windstream or a predecessor company, also can rest easy. Morris said they should not experience any benefit changes as a result of the bankruptcy filing.
The one group that has taken a big hit because of the court ruling is investors. Windstream's stock closed at $3.37 on Feb. 15, the day the court ruling came out. It closed Monday at 48 cents, a decline of more than 80 percent.