Thread regarding Windstream Corp. layoffs

Agree about shedding the heavy management. Way too many VP's from the companies WS bought out. THey also have too many PM's and lower management they can get rid of easily as they do nothing since there are too many of them.

WS will outsource it all like they have done with IT and Help Desk.

Another comment:

Windstream has lost a ton of money. If it starts making money in the future, it can offset the profits with the accumulated losses ("net operating losses" - NOLs) to reduce its corporate taxes.

NOL tax benefits are hard to transfer; if you don't structure a deal properly, the new entity can't use them. The tax regulations on this stuff are very technical.

As I recall, Windstream's NOLs are worth maybe a billion dollars? If not that much, it's many hundreds of millions.

I'm not a tax lawyer but I think this favors keeping the Windstream corporate entity alive in some form after bankruptcy.

If the NOLs equal a billion, then that's taxes on a billion that gets repaid faster to the creditors if Windstream doesn't have to give it to the feds. Everybody will want some deal that preserves the NOLs.

"The bond holders are going to clean house of the current management"

That's an interesting point for discussion. Management is currently acting as the "debtor in possession". They get first crack at presenting a plan of reorganization -- a business plan for the company post-bankruptcy. This would include both an operating and financial plan for the business and the repayment plan for the different tiers of creditors: first lien, second lien and unsecured creditors.

All the various stakeholders can file comments and objections to this plan.

To get to the plan, management will hold a lot of discussions and negotiations with the committees for these groups.

Honesty and credibility are everything in these discussions. Management has to shoot straight with the others to get their plan approved.

Based on what I saw in one bankruptcy:

A lot hinges on how much all the parties believe the new business can support in terms of interest and repayment schedules.

The senior creditors will want minimum risk, so they'll want to minimize the amount of debt (other than the debt owed them) and maximize the interest they earn. They won't want equity (stock) in the company if they can avoid it - it's riskier than a firm repayment schedule. If it was totally up to them, they'd wipe out the lower tiers of debt (2nd lien and unsecureds) to reduce the risk of financial trouble repeating until they get all their money out.

If the business won't support paying them off in full, then they'll settle for partial repayment plus stock in the new company. Most would probably sell their stock on the market first chance they get just because they're in the business of lending, not investing in stock.

It's not totally up to the first lien-holders, though, if there's still going to be enough cashflow to pay something to the creditors beneath them.

This process repeats itself as you work your way further through the other layers. Eventually somebody gets stuck with partial repayment plus stock. Then the folks behind them either get nothing or a token amount of stock.

Whatever happens, the senior parties plus the new shareholders will approve the new board. By this point, they'll have some sense of whom they can trust. My guess is that TT will be thrown into the volcano and a new guy selected. Maybe some existing board members will be kept for some continuity, maybe not. A new CEO will come in and establish a management team of old and new players.

Another possibility is that the company gets broken up and the pieces sold to other companies. The proceeds are passed out to creditors based on seniority (first, second, unsecured). The paper shell that's left is shifted from chapter 11 to chapter 7 and liquidated.

From an employee standpoint, employees would go with the pieces and retained or laid off as the new owners saw fit.

There are also provisions for something called a "cramdown" where a senior player (or maybe even management?) can force something down others' throats with court approval. I didn't see that happen so I don't know much about it.

The other bankruptcy I saw was Telergy, a regional middle mile provider and CLEC. It was a victim of the dotcom collapse. They were negotiating with creditors and potential new sources of money when 9/11 happened and the WTC collapsed a few blocks from their meeting. That was the final straw -- they shifted to chapter 7. Their main asset was fiber; at that point it was worth pennies on the dollar for what it cost to build it. (A few years later, it was worth a lot).

I just don't see the ILEC going the way of Telergy.

The bond holders are going to clean house of the current management

What's this about the end if June/,July ,1

Windstream has that money from Citi it's business as usual, did you not get the memo? Seriously though, how does Windstream get rid of all this debt? Ch 11 only seems to prolong it.