Amp’d Mobile’s first bankruptcy hearing was Tuesday afternoon in Wilmington. Steven Yoder, one of the attorneys representing Amp’d, told me by email, “All of the relief we sought today was granted … I would say that today was a positive and necessary first step
for the company as we begin what we hope will be a short chapter 11 process.” That means the company should have enough money to meet its $987,000 payroll June 15 and cover some other expenses; also that phone service will continue uninterrupted.
Verizon files back: As we mentioned in Monday’s report, the description of Verizon’s actions regarding Amp’d Mobile was from solely from the Amp’d perspective. Verizon fired back Tuesday in a filing that also took issue with Amp’d’s proposed emergency budget — and its lack of payments to Verizon Wireless. Verizon, which has been suggested as a possible buyer for all or part of Amp’d, contends that the termination of its wholesale agreement with Amp’d happened three hours before the company filed for bankruptcy Friday night, making it prepetition and enforceable. Amp’d wants a ruling that the agreement is in full force and that service should continue uninterrupted. Verizon notes that is without “assurances of payment” — and takes exception to a proposed budget that includes payment for legal fees but not for phone service. At one point, Verizon says the proposed $4.118 million budget “could charitably be described as completely deficient in detail.” Also from the filing:
— Amp’d was spending $12-15 million a month on network capacity wholesale from Verizon.
— Amp’d promised Verizon payment backed by $40 million in “equity contributions and commitments that the Debtor claimed would be obtained by June 1. That didn’t materialize and Verizon terminated the agreement at 8:10 p.m. after the close of business on both coasts. (Verizon is in New Jersey; Amp’d is in LA.) The bankruptcy filing timed off at 11:39 eastern.
— One of the major issues now is how the secured lender — Kings Road Investment, a subsidiary of Polygon — would be treated compared to Verizon and others. Verizon wants assurances that it will be paid for services delivered after the filing and points out that it is likely to be the company’s largest administrative creditor.
— As is usually the case, Verizon takes the language used by Amp’d and tosses it back, reminding the court that Amp’d is in a “serious liquidity crisis.” Verizon: “The fundamental problem is not likely to be remedied any time soon, if at all, and will continue to impair the Debtor’s ability to generate revenues going forward.”
Update: Some more specifics on the results of Tuesday’s hearing, according to the lawyer for Amp’d. The company has permission to use cash collateral from Kings Road — Verizon’s opposing motion was denied — but there is no DIP (Debtor-in-Possession) financing yet.