Optical IP network provider, Yipes Communications has hit the Chapter 11 skids, joining the ranks of [email protected], NorthPoint Communications and Rhythms NetConnections.
The San Francisco-based company Friday filed a voluntary petition for reorganization in the U.S. Bankruptcy Court. Yipes execs released a statement saying they expect to continue its business operations – including adding new customers. The company says it is also making arrangements for debtor-in-possession financing.
“This proposed restructuring is unavoidable given the unprecedented pessimism affecting providers of capital to the telecom market,” said Yipes CEO Jerry Parrick. “Although our pioneering technology has proven its merits and customer demand for Yipes services is exceptionally strong, the ‘perfect storm’ now battering the telecom industry has pummeled even the mighty, and we are no exception.”
Yipes raised $291 million in its overall VC funding including Norwest Venture Partners, New Enterprise Associates (NEA), The Sprout Group/CSFB, Focus Ventures, JP Morgan Partners, BancBoston Ventures, Soros Private Equity Partners, Focus Capital and Intel Capital.
But without substantial new investors, the company claims it faces a cash squeeze in meeting fixed obligations such as fiber infrastructure and, more importantly, real estate. Yipes has to compete with the big boys of telecom including AT&T
Ironically, the company acquired the rights to more than 3,500 office buildings through a buyout of assets formerly owned by Broadband Office, an in-building carrier that filed for similar Chapter 11 Bankruptcy.
“We are committed to delivering on our promises,” said Parrick. “We are especially committed to continue – without interruption – providing customers the fastest, most flexible and affordable service they have ever enjoyed. When market conditions stabilize, we will be even better positioned to exploit the tremendous pent-up demand for instantly scalable optical Ethernet services.”
The company’s service is available in 21 markets and includes Yipes MAN (Metro Area Networking), Yipes NAN (National Area Networking) and Yipes NET (high-speed Internet access).