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XO gets OK on first day

Tue, 06/18/2002 - 8:00pm
Jonathan Berke

Copyright 2002 The Deal L.L.C.

The Daily Deal…06/19/2002

From LexisNexis

Bankrupt XO Communications Inc. got Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to approve all its first-day motions Tuesday, June 18, in what was probably the broadband provider's quietest day in months.

"Everything went as expected," an XO spokesman said.

Reston, Va.-based XO was not seeking debtor-in-possession financing, which may have helped move Tuesday's hearings move along. The company said in a statement Monday that it had about $555 million in cash and marketable securities for operating expenses during its bankruptcy stay.

Applications for DIP financing can often turn rancorous, since creditors often file specific objections to the fees or collateral issues involving the loan.

XO's standard first-day motions included authorizing use of its existing bank accounts.

The next hearing for XO has been tentatively scheduled for July 9, in which Gonzalez will hear the company's motion to extend the time it will have to assume or reject leases on its existing office space.

In addition, the bankruptcy court has scheduled a disclosure statement hearing for July 19 with respect to XO's dual plan of reorganization.

XO filed a dual plan of reorganization in which it will first try to pursue an $800 million deal it signed with Fortsmann Little & Co. and Telefonos de Mexico SA de CV (Telmex) in January.

If XO fails to close that deal, it will work on a stand-alone plan in which its senior bank group, holding $1 billion of debt, would get control of the company.

Houlihan Lokey Howard & Zukin is advising XO on its restructuring, and Willkie Farr & Gallagher is its counsel.

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