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Aggressive growth is catching up to FairPoint Communications.

The Wall Street Journal reports the company is seeking Chapter 11 bankruptcy protection to reduce its debt by two thirds and keep the company from going under.

In 2008, Fairpoint made a series of moves to increase their size and market share. Previously a rural market operator, they acquired Verizon Wireless Inc.’s landlines  in New England. That move came with $2.3 billion in debt, and some rapid growth, according to the New York Times.

The company quickly became the eighth largest communications company in the country as they jumped from 275,000 customers to almost 2 billion!

The company obtained Verizon and their large debt just before the credit market rules and regulations were tightened. So once the deal was made, the company struggled to refinance or obtain any new loans.

Coupled with customer migration from landlines to wireless service, the company was faced with new debt but fewer customers.

Without the ability to make payments on their $2 billion debt, FairPoint decided to seek bankruptcy protection.

The reorganization plan is designed to cut down FairPoint’s debt from $2.7 billion to about $1 billion. The company will not make any interest or principal payments while in chapter 11 bankruptcy protections. After the plan is complete, it will reduce its interest payments by $200 million to about $65 million a year.

The plan will provide lenders with full equity ownership so any profits made by the company will go to the lenders to pay off any debt. Lenders gave FairPoint until the end of October to reach an agreement for debt repayments before they begin to demand the outstanding loans.

After the company finishes with bankruptcy court about $1.1 billion of their debt will be converted to equity. This will transfer the equity ownership and control of the company to their lenders of the credit facility.

David Hauser, FairPoint Chairman and Chief Executive, said that the everyday operations of the company should continue as normal after they file for bankruptcy. Their financing will convert to a five year revolving credit facility once they are finished filing for chapter 11. This means they will not have a fixed number of payments for their credit. As of now the company has $46 million in cash to keep everything going.

Learn more about Chapter 7 bankruptcy.