RealTime IT News

Court Approves Final PSINet Breakup

PSINet, Inc., once one of the highest rollers in the Washington high tech arena, will soon be no longer under a plan approved by a bankruptcy court Monday to dissolve what remains of the Internet backbone. The plan calls for PSINet to sell its remaining assets, to move out its Ashburn corporate offices by the end of June and to cease trading its stock.

In February, Washington, D.C.-based optical Internet service provider Cogent Communications Group, Inc. agreed to acquire the major U.S. operating assets of PSINet. The acquisition includes portions of PSINet's U.S. customer base and network, certain equipment, and three hosting centers.

Under the plan approved Monday, PSINet will have approximately $475 million to pay creditors. After administrative and priority payments, the company will have approximately $440 million to pay unsecured creditors. PSINet owes almost $4 billion to unsecured creditors and bondholders.

Last June, claiming total liabilities of $4.3 billion, PSINet, the pioneering wholesale Internet service provider that went on an aggressive acquisition binge over the last four years, filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Included in the filing were 24 PSINet operating subsidiaries in the U.S.

Since filing for bankruptcy protection, PSINet has sold operations in Japan, Canada and South America. The company still has hosting centers in Miami and Boston that are for sale.