Amp’d Mobile, Verizon Wireless Deal OkedDelaware bankruptcy judge said Amp’d Mobile LLC can pay $2.5 million to Verizon Wireless under a deal that will allow the start-up to continue using Verizon’s cellular network while it reorganizes under Chapter 11 protection.
Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court in Wilmington, Del., signed off Monday on the deal.
Los Angeles-based Amp’d Mobile doesn’t have its own cellular network but buys network capacity on a wholesale basis from Verizon Wireless.
Under the deal, Amp’d Mobile will pay Verizon $2.5 million, which will be used to pay down a portion of Amp’d Mobile’s post-bankruptcy debt to Verizon. Verizon has billed Amp’d Mobile $10.6 million for just June, according to court papers.
Verizon Wireless, owed $33 million, is Amp’d Mobile’s largest unsecured creditor.
In return for the partial payment, Amp’d Mobile will continue to have access to Verizon’s network. Amp’d Mobile also agreed to drop a lawsuit it filed after Verizon Wireless moved to kick Amp’d off its network.
Verizon Wireless, based in Basking Ridge, N.J., moved to cut off Amp’d Mobile after the startup failed to make payments that were due under the network agreement, forcing Amp’d Mobile to file for bankruptcy earlier this month.
It’s expected the Verizon deal should help Amp’d Mobile obtain financing to fund its business during its Chapter 11 case. The dispute with Verizon had hindered the company’s efforts to obtain a loan to finance its bankruptcy case.Company officials couldn’t be reached for comment on the status of Amp’d Mobile’s efforts to obtain a bankruptcy loan
The company has been funding its Chapter 11 case, in part, with cash collateral belonging to its lender Kings Road Investment Ltd. Cash collateral refers to any cash, stocks, bonds, or other cash equivalents a company can use to fund its business with the permission of its creditors or the order of a judge.
After filling for bankruptcy last month, Amp’d Mobile, along with backer Kings Road sued Verizon Wireless, a joint venture between Verizon Communications Inc. and Britain’s Vodafone Group PLC, seeking a court order barring the company from kicking Amp’d off its network.
As well as providing videos, games and music to subscribers’ cell phones, Amp’d also develops it own content. The Comedy Central cable network recently began airing its “Lil’ Bush,” an animated series originally developed for the wireless company.
Launched in 2005, Amp’d Mobile filed for Chapter 11 protection on June 1 in the Wilmington bankruptcy court, listing less than $100 million in assets but over $100 million in debt.
The company ran into trouble despite bringing in more than $360 million in start-up funding. Amp’d Mobile blamed its financial problems on its rapid growth and significant percentage of its more than 200,000 customers not paying their bills on time.
Wireless Mobile Telecom Wireless News
