Windstream creditor groups object to length of exclusivity extension

By Caroline Salls

Pittsburgh, Dec. 16 – Several interested parties objected Monday to Windstream Holdings, Inc.’s exclusivity extension request, according to filings with the U.S. Bankruptcy Court for the Southern District of New York.

Limited objections were submitted by the official committee of unsecured creditors appointed for Windstream’s case, indenture trustees UMB Bank, NA and U.S. Bank NA, an informal group representing first-lien debtholders and an informal committee of second-lien noteholders.

The unsecured creditors committee said in its objection that, while the Windstream debtors have made some progress in their Chapter 11 cases by advancing the Uniti litigation, “the uncertainty regarding the outcome of that litigation has led to little progress in crafting a confirmable plan of reorganization.”

The committee said mediation with Uniti and other stakeholders has been unsuccessful to date and has been suspended.

Although it hopes a resolution can be reached via mediation, the committee said under the current circumstances, a court ruling following either a trial or a motion will be necessary to resolve the Uniti claims.

“In the meantime, the debtors continue to burn cash – most notably in the form of $54 million a month in ‘rent’ payments to Uniti,” the creditors committee said.

Although the Uniti trial is scheduled to end on March 6, the committee said Windstream’s motion looks to extend its exclusive periods by more than eight months, to late August 2020.

The committee said it supports a limited exclusivity extension, but it feels “the proposed extension is too long given the significant uncertainties that remain.”

Meanwhile, the unsecured notes indenture trustees said in their objection that the proposed 247-day extension is inappropriate, in light of the fact that the Windstream debtors have been “hemorrhaging cash” since they filed bankruptcy.

In addition, the indenture trustees said Windstream has not acted quickly to prosecute its cases and has “failed to make any meaningful progress on toward a plan, largely because of [the debtors’] to adopt an appropriate value-maximizing stance with respect to the master lease, whether as a consequence of conflicts of interest or poor judgment.”

The indenture trustees suggested that the company be granted a two-month or three-month extension at this time.

The first-lien and second-lien groups agreed that the length of the requested extension was excessive, given the progress to date in the Windstream cases.

A hearing is scheduled for Dec. 18.

Windstream is a Little Rock, Ark., telecommunications provider. The company filed bankruptcy on Feb. 25, 2019 under Chapter 11 case number 19-22312.

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