Rural broadband provider Windstream Holdings Inc. is closer to exiting from chapter 11 under a proposal that would allow hedge-fund manager Elliott Management Corp. and other investors to buy the bulk of the company’s equity out of bankruptcy while wiping out most junior debt, the Wall Street Journal reported. Bankruptcy Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said on Friday that he would approve Windstream’s settlement deal with Uniti Group Inc., over a lease dispute. Uniti is a Windstream spinoff whose broadband network is crucial to the telecom company’s operations. The settlement will add about $1.25 billion in net present value to the Windstream estate. Windstream’s unsecured creditors had opposed the settlement, saying that it leaves them out in the cold. In a court hearing held by phone, Judge Drain also said that he would approve a multi-month commitment by Windstream lenders to invest in the reorganized company as well as an updated version of the disclosure documents describing its chapter 11 plan, with some modifications. The judge’s rulings make way for a proposed restructuring of Windstream that would deliver all but a sliver of equity control to top lenders led by Elliott, the company’s largest creditor, while virtually wiping out roughly $1.1 billion in lower-ranking bonds. Windstream, of Little Rock, Ark., has the support of the majority of its creditors, those holding about $4.1 billion of its $5.5 billion total debt, a lawyer for the company said at the court hearing.
