FairPoint May Reimburse New England State Agencies’ Bankruptcy Case Costs
FairPoint Communications is authorized to pay an estimated $600,000 in legal costs incurred by Maine’s public utility commission and consumer advocate as a result of their participation in the company’s bankruptcy, the Manhattan bankruptcy court ruled last week. The court was responding to a proposed regulatory settlement that the company made with representatives of the Maine agencies. Similar settlements are afoot between FairPoint and regulators and advocates in New Hampshire and Vermont, the other New England states where it bought Verizon networks. FairPoint hopes to have all three states’ approvals for its bankruptcy plan by June 24.
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The proposed Maine settlement can’t be implemented until the utility commission approves it, a commission spokeswoman told us. “The regulatory settlement was negotiated by a representative of the commission, but is not binding on the commission,” she added. After reviewing an examiner’s report on the proposed arrangement, expected this week, commissioners will consider by the end of June whether to approve the proposal, the spokeswoman said.
Under the Maine plan, FairPoint would reimburse the commission and the consumer advocate for the cost of staff time devoted to the bankruptcy, as well as for fees charged the agencies by outside law firms and consultants they hired to work on the case, Maine consumer advocate Richard Davies told us. His office spent less than $200,000 on the case, he said. The bankruptcy proceeding, now in its final phases, will have FairPoint report in July on progress toward implementation, Davies said.
State regulators participated in the reorganization because it includes revisions to original agreements between FairPoint and state regulators in Maine, New Hampshire and Vermont that cleared the way for the telco’s 2008 purchase of Verizon networks in those states, Davies said. The reorganization plan’s proposed revisions in state-imposed conditions, along with the company’s debt restructuring, are aimed at providing the company with the financial and regulatory flexibility it needs to expand broadband coverage in its New England territories, he said. “FairPoint serves about 80 percent of Maine, but there are 22 smaller telephone companies here, and they are reaching somewhere around 90 percent of their customers with broadband,” Davies said. “FairPoint is behind, at about 75 percent. Broadband is the biggest potential source of revenues for the company outside its regulated phone service, so we want to see them be able to build out their broadband."
FairPoint negotiated individual settlements with each states’ agencies because the conditions involved differ slightly state to state, a company spokesman said. State agencies held hearings on the matter at the end of May, he said. “The regulatory settlements each include a statement that FairPoint will pay `reasonable fees and expenses for all legal and financial professionals retained by the parties,’ that is, the state agencies,” the spokesman said. “FairPoint expects to have all three state utility commissions’ approvals by June 24. This is vital for the company to emerge from Chapter 11 in early fall, as we plan.” Vermont and New Hampshire agencies didn’t respond immediately to requests for comment.