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Aurelius Capital Management LP is lobbying the board of Frontier Communications Corp. against putting the financially strained telecommunications giant into chapter 11 bankruptcy, WSJ Pro Bankruptcy reported. In a public letter on Wednesday to Frontier’s chief executive and board, Aurelius Managing Director Dennis Prieto said that Frontier should instead pursue an out-of-court debt swap, which would extend maturities on existing debt and lower interest payments. “We see no defensible basis for the company going into chapter 11 without first attempting the exchange/tender offer recommended in this letter,” he said. A spokesman for Frontier declined to comment Thursday. The company has nearly $17 billion in debt and is coping with cord-cutting consumers that have left it scrambling to delay the debt obligations that financed its expansion. Investors like Aurelius and GoldenTree Asset Management LP have been jockeying to influence Frontier’s restructuring tactics, pitting different bondholders against each other.

Dozens of startups that want to make the leap from unregulated cryptocurrency dealer to licensed brokerage are waiting for regulators to open the door to let them proceed, the Wall Street Journal reported. Around 35 to 40 companies involved in digital assets have applied with U.S. securities watchdogs to become brokerages, with many hoping to launch electronic trading platforms, according to the Blockchain Association, an industry group. None of the applications has been approved since regulators stepped up enforcement actions against issuers of cryptocurrencies in early 2018. The roadblocks faced by the startups suggest that other companies pushing into cryptocurrencies, such as Facebook Inc., may also need to grapple with skeptical regulators and potentially extensive delays. The Securities and Exchange Commission remains concerned that investments based on the technology behind bitcoin would introduce new risks for investors, many of whom could be mom-and-pop traders. The SEC and the Financial Industry Regulatory Authority — Wall Street’s industry-funded overseer, which is partly responsible for issuing the licenses — are scrutinizing how the startups can serve as gatekeepers, the role brokers traditionally provide.

The judge overseeing Windstream Holdings Inc.’s bankruptcy gave it more time to decide whether to keep or reject a lease with Uniti Group Inc., the company that rents out the broadband network Windstream relies on to provide service to its customers, WSJ Pro Bankruptcy reported. Bankruptcy Judge Robert Drain signed off on an order at a hearing yesterday in the U.S. Bankruptcy Court in White Plains, N.Y., giving Windstream through Sept. 23 to accept or reject corporate leases. Windstream’s lease with Uniti is critical to its operations, and the two companies rely on each other, with Windstream supplying more than two-thirds of Uniti’s revenue in exchange for access to fiber and copper networks across the U.S. But the lease is open to renegotiation due to Windstream’s bankruptcy, and CEO Tony Thomas said during the company’s latest earnings call that the $650 million in annual rent it pays Uniti is “significantly above-market.” Windstream estimates its lease payments could be reduced by 80 percent or more if the lease were to be renewed by 2030 because of the significant decline of the value of the copper facilities, Thomas also said.

Facebook Inc. formally announced plans to launch a cryptocurrency called Libra, promising a secure blockchain-based payment system backed by hard assets and designed for mainstream users, the Wall Street Journal reported. Facebook today named a series of big, corporate partners — including financial-services heavyweights Mastercard Inc. and PayPal Holdings Inc. and tech giants Uber Technologies Inc. and Spotify Technology S.A. — that it said will help it create a “secure, scalable and reliable” cryptocurrency. Facebook is creating a regulated subsidiary, called Calibra, to ensure “the separation between social and financial data.” Calibra will roll out a crypto wallet — a digital wallet that can be used to pay for items online and send money — using Libra. Facebook said the service would be available by 2020 on its Messenger and WhatsApp services and as a stand-alone app.

Talks are heating up between Frontier Communications Corp. and its creditors over a potential restructuring of its $17 billion debt load, Bloomberg News reported. Advisers for three groups of creditors have held informal discussions with Frontier ahead of $2.7 billion of debt maturities in 2022, according to people with knowledge of the matter. Those notes trade at deeply distressed levels, and the company has signaled it may be ready for a more official process by adding board members with turnaround experience. No formal proposals have been submitted so far, and Frontier hasn’t indicated what it plans to do yet. A group including Elliott Management Corp., Apollo Global Management LLC, Franklin Resources Inc. and Capital Group Cos. had proposed swapping their unsecured debt into new secured notes in an out-of-court transaction, with some members also favoring a chapter 11 bankruptcy filing, the people said. The other creditor groups prefer a bankruptcy filing, in part to avoid seeing their holdings pushed down in priority through a debt swap. The group including Elliott, Apollo, Franklin and Capital Group holds about 60 percent of so-called CTF unsecured bonds maturing in 2022 and 2025. Some creditors in that group are believed by market participants to have sold credit-default swaps insuring against a Frontier default. That would skew their interests against a chapter 11 filing. A second group of creditors holds “legacy,” or non-CTF, bonds, and a third group of creditors owns a mix of CTF and legacy bonds.

Artificial intelligence (AI) over the past decade has shifted from research theories to actual practices in corporate offices. But it isn’t within the reach of many smaller companies, yet, the Wall Street Journal reported. The high upfront costs of AI tools, scarcity of people who can implement the technology at individual operations, and more pressing IT expenses have widened the gap in AI implementation. But a range of players, from large technology vendors to startups, are coming up with tools that allow small businesses to use the technology without a data scientist on staff. Still, even with such tools, it can take time for any company, large or small, to implement a new technology into its business processes. The operational efficiency of an AI system, while desirable, is still far from a priority for many companies. Many small firms looking to use AI have to build everything from scratch, said Brad Fisher, KPMG’s U.S. leader for data analytics and artificial intelligence. Even then, the firms may lack the breadth of data to train and test these systems before they are deployed. “Deploying AI technologies is a lot more complex than tech vendors would lead them to believe,” Fisher said. “Many smaller organizations’ IT departments are understaffed, with IT professionals struggling to deal with more pressing concerns, such as updating aging hardware, securing corporate networks and supporting growing tech requests from end users,” said Peter Tsai, senior technology analyst at Spiceworks, a professional network for IT workers.

Frontier Communications Corp. bonds fell further into junk territory Friday after the telecommunication company announced a reshuffling of its board to include three new directors, including turnaround veteran Mohsin Meghji, WSJ Pro Bankruptcy reported. Frontier’s bonds were among the leading decliners of high-yield issues following the announcement that Mr. Meghji, founder and managing partner of advisory firm M-III Partners LP, was named to the company’s board along with Kevin L. Beebe and Paul M. Keglevic. The yield on Frontier debt rose as prices fell on about $2.2 billion in the company’s 10.5 percent bonds that mature in 2022. Those bonds were trading at 73.5 cents on the dollar midday Friday, and $500 million of the company’s 8.75 percent bonds were trading at 69.5 cents on the dollar. Among the week’s big decliners, $775 million of the company’s 6.875 percent debt was trading at 55 cents on the dollar at midday. Frontier said on Friday in a filing that the new board members will also sit on the company’s finance committee, which is evaluating Frontier’s capital structure and will “consider, evaluate and negotiate capital markets and/or financing transactions and/or strategic alternatives.”

Cloud computing provider Fusion Connect Inc. filed bankruptcy after a botched business plan and a pair of mergers piled on more debt than the company could repay, Bloomberg News reported. Unless a court-supervised auction brings in a better deal, senior lenders owed about $574 million will take over the company under a proposal to slash debt by $300 million, Chief Financial Officer Keith Soldan said in court papers filed in federal court in Manhattan yesterday. Fusion had borrowed $680 million, including the senior lender loans, to take over Birch Communications and MegaPath Cloud Co. last year. Part of that money went to pay off subordinated debt owed to company insiders Holcombe T. Green Jr. and Holcombe T. Green, III, according to court papers. The business plan behind the Birch acquisition was “overly aggressive in terms of sustained customer bookings and price increases,” Soldan said. “Missed revenue projections left the company with significantly less liquidity than originally anticipated.” Last month, the company lost its listing on the Nasdaq because it failed to file its annual stockholder report on time.

Amazon has agreed to buy part of ad tech company Sizmek, including its ad server, CNBC.com reported on Friday. Amazon said that it agreed to buy Sizmek Ad Server and Sizmek Dynamic Creative Optimization, which is a tool that helps personalize ads using data. Amazon said its own advertising unit, Amazon Advertising, and Sizmek “have many mutual customers.” The two Sizmek units will operate separately from Amazon Advertising for the time being. Sizmek filed for chapter 11 protection in March, listing its assets at between $100 million and $500 million. In April, Zeta Global said it had agreed to buy Sizmek’s data management and demand-side platforms for up to $36 million. Sizmek also owns Peer39, which provides contextual targeting tools.

The Supreme Court yesterday handed down its decision in Mission Product Holdings Inc. v. Tempnology LLC, 17-1657 (Sup. Ct.), reversing the First Circuit and held that rejection of an executory trademark license does not bar the licensee from continuing to use the mark, according to a special analysis from ABI Editor-at-Large Bill Rochelle. As Justice Elena Kagan said, “A rejection breaches a contract but does not rescind it.” The opinion was almost unanimous, with Justice Neil M. Gorsuch dissenting; he believes that the petition for certiorari should have been dismissed as improvidently granted. In his view, the Court could not grant effective relief. Justice Sonia Sotomayor wrote a concurring opinion to say that nondebtor parties to rejected trademark licenses may have more rights following rejection than parties to other types of intellectual property licenses whose rights are limited by Section 363(n). The Court granted certiorari in October to resolve a split of circuits. Click here to read the full analysis.

A special ABI Podcast is being recorded this week to examine the Supreme Court’s decision in Tempnology. Bill Rochelle will be joined by Bankruptcy Judge Kevin Carey (D-Del.; Wilmington), Paul Hage of Jaffe Raitt Heuer & Weiss (Southfield, Mich.) and Lindsay Milne of Bernstein Shur (Portland, Maine). The podcast will be released on ABI social media and included in tomorrow’s Headlines. 

In addition to ruling on the effect of rejecting a trademark license, the Supreme Court yesterday agreed to review one bankruptcy case and denied a petition for certiorari in another. In Ritzen Group Inc. v. Jackson Masonry LLC, the Court granted certiorari to shed more light on what is or is not a final order conveying a right of appeal in a bankruptcy case. The justices declined to review Davis v. Tyson Prepared Foods Inc., a case that could have said whether passively holding property of the estate violates the automatic stay under Section 362(a). Click here for Rochelle's full analysis.