Amp’d Mobile seeks Chapter 11 protection
June 19, 2007
MVNO (Mobile Virtual Network Operator) Amp’d Mobile this month filed for bankruptcy protection, apparently because it is $100 million in debt, including $33 million owed to Verizon Wireless for the use of that company’s network.
In a statement issued the same day it filed its Chapter 11 petition, the company said it chose to take this action because its “back-end infrastructure was unable to keep up with customer demand.” It said it would continue its normal business operations while restructuring the company and noted that it was working with one of its investors to obtain debtor-in-possession financing.
The company’s bankruptcy filings, which have been reported on widely in the business and trade media, showed that 80,000 of its reported 200,000 customers were behind in their payments for the service. Meanwhile, it was behind in payments to Verizon Wireless, with which it had an agreement stipulating the use of approximately $13 million worth of services each month.
Amp’d tried to raise money to hold off on the bankruptcy as late as the day it filed for the protection, but that effort was thwarted when Verizon Wireless demanded a $4.5 million loan payment, accused the company of defaulting on the agreement and sent a letter threatening to cut Amp’d subscribers from its network.
Last week, the company’s CEO, Peter Adderton — who is also the single largest shareholder — resigned from his post.
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