Frontier Communications Corp.’s senior lenders say the telecommunications company’s prearranged bankruptcy plan is a “fragile house of cards” that won’t stand up in court, the Wall Street Journal reported. One of the country’s largest telecommunications providers, Frontier filed for chapter 11 protection on Tuesday in U.S. Bankruptcy Court in White Plains, N.Y., after reaching a deal with three quarters of the investors that own nearly $11 billion worth of its unsecured debt. With four million customers and operations in 29 states, Frontier has been grappling with the debt it acquired as it expanded its business. Lawyers for lenders owed $5.7 billion yesterday took aim at Frontier’s proposal to borrow $460 million, a new loan that would be paid off before the lenders’ claims. Brian Hermann, lawyer for a group of senior lenders, said his clients think Frontier doesn’t need the money, given the more than $725 million in free cash available now and a sale of Pacific Northwest assets that will bring in about $1.3 billion. While it has backing from unsecured bondholders for its bankruptcy plan, Frontier failed to reach agreements with its senior and junior lenders, both of whom rank ahead of bondholders in the order of payment under bankruptcy law.
