RealTime IT News

Net2000 Files for Bankruptcy; Sells Assets to Cavalier

Net2000 Communications, Inc., the Herndon, Va.-based competitive local exchange carrier, has agreed to sell its telecommunications assets, including its customer base, to Cavalier East, an affiliate of Richmond, Va.-based Cavalier Telephone. In order to effect the transaction, On Friday, Net2000 filed a voluntary petition with the U.S. Bankruptcy Court in Delaware for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Separate from the Chapter 11 petition, Net2000 also sold for $3.5 million the assets of its video teleconferencing services division to VSGi Visual Systems Group, Inc. (VSGi), a company formed by Venturehouse Group, a Washington, D.C.-based investment firm, and the division's management.

"In light of the economic conditions, Net2000 undertook this process to ensure that our customers continue to receive the same outstanding services they have grown accustomed to, while strengthening the company by combining with a strong, fiber based provider in Cavalier," said Charlie Thomas, Net2000 chairman and chief executive officer. "We do not expect our customers to experience any change in service quality during this transition period."

The company also said that it has secured debtor-in-possession (DIP) financing with TD Securities and other banks in order to meet future needs and obligations associated with normal business operations, including payments to suppliers for all goods and services that are provided after today's Chapter 11 filing.

Founded in 1993, Net2000 provides businesses with local, long distance, data, interactive video and Internet services delivered over a single broadband connection and billed on a single invoice. The company now operates sales offices in Baltimore; Norfolk, Va.; Richmond; and Washington, D.C. and network facilities in nine markets.

Created in December 1998, Cavalier Telephone is a facilities-based, local telephone company, including advanced telephone features and high-speed Internet access, for residents and businesses. Cavalier currently serves over 180,000 lines in the Richmond, Hampton Roads, Northern Virginia, Maryland, Philadelphia, Delaware and New Jersey.

Venturehouse Group is an investment firm that creates, acquires, and invests in technology and telecommunications companies. Located in Washington, D.C., the firm was founded in 1999 and is backed by several leaders in the region's technology and telecommunications industry.