Amp’d Files For Bankruptcy
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Richard Baguley Published on June 03, 2007 Comment on this |
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The cellular network Amp’d has filed for Chapter 11 bankruptcy. The motion for bankruptcy was filed late on Friday with the bankruptcy court in Delaware. According to the bankruptcy documents found by the web site MoCoNews, the company owes over 100 million dollars to various companies, including Verizon and Motorola. But the Amp’d is not done for; this type of bankruptcy allows for a company to rework their debts and continue operating.The MVNO (Mobile Virtual Network Operator; a company that resells access to another companies network) filed for Chapter 11 bankruptcy, which is different to the Chapter 7 type of bankruptcy used when a company can’t pay the bills and is forced to close down. Under a Chapter 11 bankruptcy, the company gets the chance to re-negotiate the repayment of their bills, then emerge in a few months or years and operate normally. In an official statement from the company, they claimed that the action was in order to “restructure the business. As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand. We are taking this step as a necessary and responsible action to sustain and strengthen our momentum in the market place.”
The company claims to have around 200,000 subscribers, and recently issued a press release claiming that 84,000 of these had signed up in the first quarter of 2007. However, the cost of acquiring these customers is what may have driven them over the edge, and the company has a considerable way to go before they can emerge from the bankruptcy. According to the bankruptcy filings found by MoCoNews, the company owes a lot of money: the three biggest creditors are...
Verizon (who supply their network): Approx. $33 million
Motorola (who supply some of their handsets): Approx. $16.3 Million
Vivendi (who supply much of the music on their online music service): Approx. $10 million
Other creditors on the list include Qualcomm, Best Buy and MTV. The total amount is over $100 million, but the company claims to have assets of less than $100 million. We’ll have to see if the company is successful in negotiating a new payment plan with their creditors, but this news does underline how competitive the cell phone market is.
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