The U.S. Federal Trade Commission and several states yesterday filed a lawsuit against Frontier Communications, accusing them of lying about internet speeds, in one of the first cases the regulator has overseen since net neutrality rules were repealed, Reuters reported. In the complaint, the agency and state attorneys general said that Frontier advertised internet via a digital subscriber line (DSL) at certain speeds to consumers but then failed to deliver. The lawsuit was filed in the U.S. District Court for the Central District of California. The FTC was joined on the lawsuit by attorneys general from Arizona, Indiana, Michigan, North Carolina and Wisconsin. District attorneys’ offices from two California counties also joined the complaint to represent California.
Subscription streaming video pioneer Roku on May 11 submitted a $5 million bid for the intellectual assets of bankrupt MobiTV, the Emeryville, Calif.-based company providing software for on-demand programming, live TV, catch-up TV, network DVR and content recommendations without the need of a set-top box, Media Play News reported. On March 1, MobiTV filed for chapter 11 protection, citing $10 million to $50 million in assets and $50 million to $100 million in liabilities. Roku, which co-started the streaming video on-demand (SVOD) market more than 10 years ago with Netflix, joined RPX, a patent license aggregator, in the bid. U.K.-based IPTV software provider Amino joined the companies, contributing another $10 million bid for the “going concern” of the MobiTV business. That consortium was then edged to the sidelines when TiVo Xperi upped its original $13 million bid to $15.5 million, and is now seen as the frontrunner for MobiTV assets — in an auction process that continues today.
As Frontier Communications emerged from chapter 11 bankruptcy on Friday, officials with the Norwalk-based telecommunication company made it clear they expect high-speed internet service — delivered by fiber optic cable — to deliver them from the financial wilderness, the New Haven (Conn.) Register reported. “The focus is on fiber,” said John Stratton, the incoming executive chairman of the board for Frontier, which saw its executive team undergo a dramatic reorganization during the full year it was under chapter 11 bankruptcy protection. “The goal is to replace our existing copper network with fiber.” Stratton and other Frontier executives explained the company’s strategy during a call with financial analysts reporting on its first quarter earnings. The company had earnings of $60 million in the three-month period that ended March 31 — a dramatic reversal from the same period in 2020, when the company lost $186 million.
TerreStar Corp. has hired a financial adviser to explore strategic alternatives for the 5G airwaves within its medical division, Bloomberg News reported. The company, majority-owned by Solus Alternative Asset Management, is weighing options to monetize the spectrum, either by refinancing debt or going public through a merger with a special purpose acquisition company. It could also seek investment from a private equity firm or a large telecommunications company. TerreStar got permission from the U.S. Federal Communications Commission last year to use its wireless airwaves in medical facilities, and potentially to deploy that spectrum in other industries if it meets certain conditions. This increased the value of the licenses, which could now fetch more than $1 billion. The midband frequencies, including those licensed by TerreStar, are prized for their combined ability to travel far and carry lots of data. They are expected to drive years of growth when deployed for next-generation mobile devices, autonomous vehicles, health-care equipment and manufacturing facilities. TerreStar was founded in 2013, born from a restructuring of the original company, which was a mobile satellite network operator. One of its units, TerreStar Networks Inc., was sold to Dish Network Corp. for $1.38 billion. The chapter 11 restructuring eventually handed ownership of TerreStar to investors including Solus and Highland Capital Management.
Augustus Intelligence Inc., which has received more than $100 million from investors since 2019, has filed for bankruptcy, a month after regulators had begun investigating its equity fundraising, the software developer said, WSJ Pro reported. The New York-based company said that one of the goals of its chapter 11 restructuring, filed Saturday in the U.S. Bankruptcy Court in Wilmington, Del., is to settle investor disputes. Brian Ryniker, recently hired as chief restructuring officer, said that in addition to unsecured debts totaling $2.1 million, there also are claims, which the company disputes, made by certain former employees. Augustus was co-founded in 2018 by Wolfgang Haupt to develop and license artificial intelligence software. Haupt is controlling founder, holding 68% of the company’s equity, Ryniker said. In 2019, Augustus raised $113.5 million from investors and was once valued at as much as $250 million, he said. The company initially used the funds to hire key employees, develop technology and invest in research and development. It has developed or acquired several patents and patents pending, Ryniker said in a court filing. Augustus also has made two acquisitions. Through subsidiaries that aren’t part of the bankruptcy, the company has roughly 30 clients. Ryniker said some employees were fired by prior management for breaching confidentiality and noncompete agreements. Prior management said they conducted a “smear campaign” against Augustus in the AI community, he added. The former employees last year sued Augustus, alleging they were “fraudulently induced” to join Augustus based on representations about the status of its seed funding and product development, Ryniker said.
Private equity-owned Secure Home Holdings LLC filed for bankruptcy protection after its top-ranking lenders agreed to award themselves the home security systems business, leaving suppliers and other unsecured creditors owed $110 million unpaid, WSJ Pro reported. The terms are proposed in a “prepackaged” chapter 11 reorganization plan that Secure Home filed Monday, shortly after the Sunday bankruptcy filing. Ballots haven't been cast yet, but top lenders, led by affiliates of Invesco Ltd., have agreed to cancel part of their debt in exchange for ownership of Secure Home. Bank lenders are owed, in the aggregate, about $197 million, a figure that includes unspecified fees and costs, according to court papers. Funds managed by Oaktree Capital Management mostly own Secure Home, with Ironwood Capital and Alcentra Capital Corp. as minority stakeholders. Oaktree declined to comment. Prepackaged bankruptcies normally involve advance voting by creditors that stand to lose something under the proposed plan. Secure Home hasn’t formally polled its senior lenders, but said they have agreed to the proposed debt-for-equity swap plan. Under its proposed chapter 11 plan, Secure Home wouldn’t be handing out ballots to unsecured creditors or second-lien lenders, even though both groups stand to lose all. Investment banker Raymond James & Associates Inc. estimates the company has an enterprise value of about $145 million, less than the amount it owes senior lenders.
The California Public Utilities Commission has unanimously voted to approve a MVPD engaged in a “good faith” complaint with Gray Television to emergence from chapter 11 bankruptcy, RBR.com reported. The decision comes three months after the FCC gave its blessings. In a brief statement, Frontier Communications confirmed that it secured the all-important CPUC approval. That’s the last of the necessary approvals needed for Frontier to successfully emerge from debtor-in-possession status. The long-awaited approval follows the mid-January OK from the Commission of its chapter 11 reorganization plan. Frontier also successfully received regulatory approval or favorable determinations in 13 states. Upon emergence, Frontier will have reduced its total outstanding indebtedness by more than $10 billion.
Nearly one year into its bankruptcy, Intelsat SA is struggling to gain the support of a group of creditors that says the satellite operator’s proposed restructuring strategy improperly benefits other stakeholders at the group’s expense, Reuters reported. The dispute comes as Intelsat, represented by Kirkland & Ellis, prepares to ask U.S. Bankruptcy Judge Keith Phillips in Richmond, Virginia, for a nine-month extension of its exclusive period to file a chapter 11 plan at a virtual hearing on Wednesday. Though Intelsat filed a plan in February, it says the additional time is necessary to ensure that it maintains control of its case, which is especially complicated due to the various types and levels of debt at Intelsat’s multiple bankrupt entities.
