Charter Communications Bankruptcy Approved

Charter Communications, a major provider for television cable and internet in many states, will finally be able to finished their bankruptcy filing.

The company filed chapter 11 bankruptcy last March. Although the company is based in Missouri, they filed their plans in New York state. A judge in the Southern district there recently approved their plan, allowing the company to move forward with major restructuring plans to help them deal with more than $20 billion in debt, a recent New York Times report stated.

Charter Communications provides phone, Internet and cable television services in 27 states and has about 5.5 million customers across the nation. Charter was one of largest publicly traded companies in the United States.

Charter was unable to refinance or obtain new loans because of their debt, strict credit markets and a tough economy. The company’s goal is to shed $8 billion of their $21.7 billion debt through bankruptcy, giving them more flexibility.

The bankruptcy plan also shifts ownership from Chairman Paul Allen – who is also the co-founder of Microsoft – to Charter Communications shareholders. Mr. Allen will continue as the chairman and an investor, according to the St. Louis Business Journal.

Since the reorganization has been approved, Allen will no longer control the nominations and votes for the board of directors. How much control he will have with the future of the company will depend on how much stock he has after the plan is complete, said a report on CNN Money.

In the reorganization a number of different debt holders and bond holders will get new notes, equity and cash depending on seniority. Unfortunately, all shareholders will not get anything for their stocks, which are being canceled.

The reorganization hasn’t been all smooth sailing. JP Morgan Chase Co lent $8.2 billion to the company and  opposed the plan stating it violated their loan agreement with Charter.

The company stated in a press release, “The purpose of Charter’s financial restructuring is to strengthen its balance sheet in order to fully support the company’s operations and service its debt.” By filing for chapter 11, Charter is cutting their interest expenses and in the long run this might generate more cash flow to invest back into the business, the St. Louis Beacon reports.

Charter claims it has $800 million in cash. Along with its ability to sell assets without the price fluctuating and cash from operations the company will should have enough to see them through the bankruptcy and meet the companies’ needs.

The company continues to state that they will be better able to provide their services to all their customers and business operations will carry on as normal. Learn more about Chapter 7 bankruptcy.