Financially embattled MVNO Amp’d Mobile has struck a deal with Verizon Wireless that will allow it to continue to use the operator’s network for its mobile TV service, despite owing more than $40 million for the network’s use.
Amp’d filed for Chapter 11 bankruptcy protection in early June shortly after Verizon demanded a $4.5 million loan payment and sent a letter threatening to kick Amp’d subscribers off its network. Amp’d responded by filing a lawsuit against Verizon to prevent such an action. According to a July 3 Associated Press report, however, a judge in the Delaware bankruptcy court where Amp’d filed for Chapter 11 ruled that the MVNO can continue to use the network if it pays Verizon $2.5 million.
The ruling will allow Amp’d to continue servicing subscribers while it reorganizes under the Chapter 11 protection. The $2.5 million will be credited toward the $10.6 million Verizon Wireless charged Amp’d for the use of its network after the latter’s filing for bankruptcy protection in early June. As part of the deal, Amp’d agreed to drop the lawsuit.
When Amp’d filed for bankruptcy protection, it was approximately $100 million in debt, including $33 million owed to Verizon Wireless. In a statement issued the 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 showed that 40 percent 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 the $4.5 million loan payment.
Shortly after the Chapter 11 filing, Peter Adderton, the company’s CEO, resigned.