After Bankruptcy Filing, Fusion Connect Vows To Pay Channel Partners ‘In Full And On Time’

‘Our relationship with you is essential to our future success,’ Fusion Connect chairman and CEO Matt Rosen said in an email yesterday to the New York cloud services provider’s channel partners, after the company filed its Chapter 11 bankruptcy petition.

The chairman and CEO of Fusion Connect, a New York cloud services provider that filed for Chapter 11 bankruptcy protection today with more than $760 million in debt, has vowed to continue paying its channel partners their commissions “in full and on time.”

“Our relationship with you is essential to our future success,” chairman and CEO Matt Rosen said in an email yesterday to Fusion Connect’s channel partners, after the company filed its bankruptcy petition with the U.S. Bankruptcy Court for the Southern District of New York.

“…In short, this process will not impact our relationship with you -- or our customers -- in any way,” Rosen said in the email obtained by CRN. “We are committed to paying all commissions in full and on time. We will continue to deliver the same outstanding portfolio of advanced cloud communications and secure managed services to help your customers increase productivity while reducing costs. We continue to measure our success by your success, and as we strengthen our financial position, we fully expect to find even more ways for us to sell, compete and grow together.”

Fusion Connect, which provides cloud communications, cloud connectivity, and cloud computing services, is a public company with the majority of its shares (60.7 percent) held by Atlanta-based BCHI Holdings LLC. The company’s stock was delisted from Nasdaq last month after it failed to file its annual report in a timely manner.

Fusion Connect attributed its bankruptcy filing to limited liquidity and being at risk of defaulting on its loans after it underperformed compared to its business projections following its mergers last year with Birch Communications Holdings and MegaPath Holding, for which it accumulated $680 million in secured debt.

Fusion Connect’s bankruptcy documents list $760,720,713 in liabilities and $570,432,338 in assets as of April 30. Its two Canadian subsidiaries are not included in the filing.

“…We firmly believe that our voluntary Chapter 11 filing is the most appropriate course of action to protect and enhance the value of our business while securing the best possible outcome for all of our stakeholders,” Rosen said in the partner email.

The company began a marketing process last month to gauge potential investors’ interest in capital investments in Fusion or an outright acquisition if a court-approved auction proves more financially beneficial than a reorganization slated to include a $300 million, debt-for-equity reorganization plan with lenders.

Fusion, which last month secured a $20 million from its senior lenders, is seeking court approval to borrow another $39.5 million from the group.

“Along with Fusion's usual cash flows, this will ensure that we will be able to operate our business as usual and fulfill our commitments to our valued customers and other stakeholders,” Rosen said in the email to partners.

Channel partners account for the majority of Fusion Connect’s new business bookings and are “critical to promoting and maintaining customer sales and satisfaction,” the company stated in bankruptcy documents that requested court approval to continue to honor its customer programs and obligations.

Fusion Connect’s Creditors

AT&T, which Fusion Connect owes more than $24.7 million, topped the company’s list of its 40 largest unsecured creditors who are not company insiders. The list includes many telecommunications companies and solutions providers, including Verizon Communications (owed $4,163,922), ZAYO Group ($3,090,335), XO Communications ( $2,375,266), the Federal Communications Commission ($2,310,000), Global Capacity Group ($1,606,001), Frontier Communications ($1,436,315), Broadsoft ($1,374,120), CenturyLink ($1,051,126), Level 3 Communications $834,568), Windstream Communications ($768,763), Time Warner Cable ($587,649), Universal Service Administrative Co. ($531,389), Infinit Technology Solutions ($496,922), SoftwareONE Inc. ($484,649.00), Symantec ($426,959), Dell Technologies ($401,275), Salesforce.com ($393,803) Equinix ($366,070), GTT Communications ($356,505), Microsoft ($344,148), Metaswitch Networks ($304,803), Persistent Systems ($280,690), Comcast ($269,383), TelePacific ($258,549), Veristor Systems ($249,985), ScanSource Communications ($244,336), Inseego North America ($243,023), Park Place Technologies ($240,999), CounterPath ($222,832), Safari Micro ($220,758), NETXUSA ($214,009), Quest Technology Management ($213,861), Object Frontier ($208,200), FPL Fibernet ($203,684), Empirix ($192,673) and Sonian ($191,206).