NTL, the crisis-hit cable company, is considering filing for Chapter 11 bankruptcy in the United States as a way to push through its restructuring.
The company, which is close to collapse under £12bn of debt, would use the protection of Chapter 11 to seal its recapitalisation deal, which would require its creditors to accept a debt-for-equity swap.
A bankruptcy filing would be used by the company towards the conclusion of the talks with creditors, once most parties were on board with the plans. NTL's operational business, which is mostly its UK cable network, would be unaffected. The group, which is registered in the US, started complex negotiations with its debt-holders at the end of January.
Reporting a crushing $16bn (£11bn) loss for 2001 last week, Barclay Knapp, NTL's chief executive, said: "I think we're fortunate in the sense that we started relatively early and we can see we're probably in the back half of the process now."
Mr Knapp said "substantial and rapid" progress had been made in the restructuring talks and he was optimistic about the future, despite warning NTL could run out of money before it had a deal in place. An agreement is sought with banks and bondholders, and also with strategic and other investors, by the end of June.
Once a company is in Chapter 11, the will of the majority of creditors is easier to enforce. It saves an agreement being derailed by a disgruntled minority or a third party. Having established a framework understanding, going for Chapter 11 gives a company time to tie up the details of a restructuring. If everything goes to plan, NTL would come out the other side with its recapitalisation in place.
Industry sources said Chapter 11 was one of the options being considered by NTL and the company hoped it would be viewed as a sign of progress. A spokeswoman for the company said suggestions of a Chapter 11 filing were "speculative".Reuse content