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September 20, 2022 – The Debtors filed a motion to extend (for a third time) the periods during which they have an exclusive right to file a Plan and solicit acceptances thereof, through and including December 31, 2022 and March 1, 2023, respectively [Docket No. 630]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on October 1, 2022 and November 30, 2022, respectively.
Although the Debtors note that they are still awaiting a pair of approvals from a UK regulator, it is the California Public Utilities Commission (the "CPUC") which they really single out as responsible for their now nine-month period in post-confirmation limbo. Noting that they have secured the FCC's approval and that of nine other states, the Debtors note as to their "uncontested" CPUC application …"As of the date hereof, the CPUC Application remains pending and the Debtors cannot predict with certainty when they will receive final approval from the CPUC."
A hearing to consider the motion is scheduled for October 12, 2022, with objection due by October 5, 2022.
On October 31, 2021, GTT Communications, Inc. and nine affiliated debtors (“GTT” or the “Debtors”) filed for Chapter 11 protection noting estimated assets of $2.8bn; and estimated liabilities of $4.1bn ($2.015 of funded debt). At filing of their prepackaged Plan, the Mclean, Virginia-based provider of global network connectivity and internet services, noted that their aggressive acquisition strategy had led to unsustainable debt servicing obligations as compounded by the discovery of accounting irregularities and subsequent senior debt/bond defaults.
On December 13, 2021, the Debtors filed a Third Modified Prepackaged Plan which was confirmed by the Court on December 16, 2021.
The Third Extension Motion
The motion [Docket No. 630] states, “Since the commencement of these prepackaged Chapter 11 Cases, the Debtors have made substantial progress toward consummating the proposed Restructuring Transactions contemplated by the Plan. To that end, over the course of these Chapter 11 Cases, the Debtors and their stakeholders have worked collaboratively to ensure the success of these Chapter 11 Cases and the Debtors’ go-forward business operations. The Debtors’ achievements and ongoing engagement with stakeholders include, among other things, obtaining all of the necessary relief to continue operating in the ordinary course while in chapter 11, stabilizing business operations, improving accounting processes and financial reporting, confirmation of the Plan, and the negotiation of the Exit Revolving Credit Facility.
Moreover, as a global telecommunications company with business operations subject to various federal, state and foreign regulatory laws, the Debtors, with the assistance of certain key creditor constituencies, have spent significant time and effort towards obtaining regulatory approvals for the Restructuring Transactions. To date, the Debtors and the applicable creditors have received many, but not all, of the regulatory approvals they have sought prior to emerging from these Chapter 11 Cases. Specifically, the Debtors have received regulatory telecommunication approvals (or determinations that no regulatory approval is needed) from (i) the United States Federal Communications Commission (the ‘FCC’), (ii) ten states and (iii) the District of Columbia. Notwithstanding such progress, the Debtors have one remaining approval pending in the United States from the California Public Utilities Commission (the ‘CPUC’), and two approvals pending before the foreign direct investment regulatory authority in the United Kingdom (the ‘U.K. FDI Authority’).
Unfortunately, the Debtors have faced significant unforeseen delays in connection with their efforts to obtain approval from the CPUC of their Application for Approval of Corporate Restructuring Under Public Utilities Code Section 854(a) (the ‘CPUC Application’), which Debtors GTT, GC Pivotal, LLC and GTT Americas, LLC (collectively, the ‘CPUC Applicants’) filed on December 10, 2021 to address ‘transfer of control’ issues applicable to California public utilities. The CPUC Application has been pending for more than nine months and is uncontested. As of the date hereof, the CPUC Application remains pending and the Debtors cannot predict with certainty when they will receive final approval from the CPUC.
The unanticipated delay of the Debtors’ emergence from chapter 11 has caused certain ripple effects on the Debtors’ liquidity profile and has necessitated modifications to certain of the first day relief obtained by the Debtors at the start of these Chapter 11 Cases. As issues have arisen, the Debtors’ and their key stakeholders have worked constructively to address them.
Moreover, the extended duration of these Chapter 11 Cases and uncertainty with respect to timing of emergence, which remains out of the Debtors’ control, has impacted the Debtors’ business and resulted in the continuation of significant cost and fee burn, including, but not limited to, ongoing adequate protection payments under the Cash Collateral Order and professional fees associated with the Chapter 11 Cases, impacting the Debtors’ ongoing liquidity needs.
The Debtors and their key stakeholders remain in active dialogue regarding potential additional modifications to first day orders and/or the Plan that may be justified by the unforeseen delay to emergence and global market conditions. The Debtors are optimistic that as issues arise, the Debtors and their key stakeholders will continue to work constructively in addressing such issues in a manner that maximizes value for all stakeholders.
When the Debtors filed the Second Exclusivity Motion and sought to extend their Exclusive Periods through October 1, 2022 and November 30, 2022, respectively, they were hoping to avoid the need for a further extension. Unfortunately, the unexpected delays in obtaining approval for the CPUC Application and pending approvals in foreign jurisdictions necessitated the filing of this Motion. Maintaining the status quo at this critical juncture is of utmost importance as the Debtors and their stakeholders work towards consummating the Plan, which maximizes the value of the Debtors’ estates and was unanimously supported by the Debtors’ impaired creditors that voted on the Plan. An expiration of the Exclusive Periods at this juncture could result in the Debtors and their stakeholders needing to return to ‘square one’ in the chapter 11 plan process and, potentially, derail the regulatory approval processes that currently are underway. The Debtors submit that the requested extensions of the Exclusive Periods are therefore appropriate to protect the value and consensus that has been built by the Debtors and their stakeholders and will not prejudice any party in interest.”
About the Debtors
According to the Debtors: “GTT provides secure global connectivity, improving network performance and agility for your people, places, applications and clouds. We operate a global Tier 1 internet network and provide a comprehensive suite of cloud networking and managed solutions that utilize advanced software-defined networking and security technologies. We serve thousands of businesses with a portfolio that includes SD-WAN and other WAN”
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