TNCI Tells Partners Commission Payments To Continue Despite Chapter 11 Filing

The Boston-based, privately held TNCI held an invitation-only conference call with its agents Tuesday afternoon to discuss implications of the Chapter 11 bankruptcy protection filing with channel partners.

Mike Ketchum, Intelisys vice president of finance, who was on the TNCI call, said TNCI assured partners that there would be no disruption in commission payouts. “TNCI has been a trusted partner for a long time, and we take them at their word,” Ketchum said.

Bill Powers, CEO of the Agent Alliance -- a group of master agents with reciprocal contract agreements --characterized the tone of the call as positive.

“We’re still working to get a full understanding of the implications. But we have confidence in the management at TNCI to work through the bankruptcy,” Powers said.

Powers said TNCI remains a very important vendor to the Agent Alliance. The group struck a deal with the service provider in 2008 to create an equity program that gave partners a stake in the future sale of the company, with a possible date of sale in 2011.

Powers said the equity plan was initially well-received among partners, but with the company in Chapter 11, that program is now uncertain.

TNCI’s president, Brian Twomey, released a statement earlier in the day.

"We will use this time under reorganization to regain our financial health and focus," Twomey said in the statement. "While we will continue to operate our business without interruption to our customers, agents and employees throughout this process, we hope to emerge from Chapter 11 as quickly as possible. TNCI does fully recognize the importance of the Agent Channel to the future of our business and every step we are making is to preserve these vital relationships, along with those we have with our customers and our employees.”

That said, whenever a major player files for Chapter 11 bankruptcy protection, it’s bound to cause anxiety in the channel, said Ron Bohm, founder and vice president of business development at SelecTel Master Agency.

“It’s a major dislocation of resources when another service provider files for bankruptcy," he said. "Bankruptcy can delay or halt commissions and income flows and agents are concerned about their incomes.”

Some TNCI competitors are already looking to scoop up business partners in the wake of the Chapter 11 bankruptcy protection filing, said a top executive for a master agent who did not want to be identified. “Folks are already trying to jump on it,” he said.

According to the bankruptcy filing, TNCI owes over $10 million to creditors, including $5 million to Sprint Communications, $1.9 million to Qwest/CenturyLink Inc., $1.66 million to AT&T, $1.2 million to Universal Service Administrative Co. of Atlanta and $1 million to Verizon.

Calls to TCNI were not immediately returned.

Chapter 11 bankruptcy protection filing allows a company to restructure its debt and reorganize under judicial supervision.