Financial distress in the telecommunications industry continues to grow in 2024 after several firms filed for bankruptcy protection last year.
Chapter 11 filings in 2023 included data center colocation, interconnection services and digital infrastructure provider Cyxtera Technologies, 5G wireless and telecom solutions provider QualTek Services, cloud-based data center provider Internap Holding, and licensed fixed wireless technology developer and internet service provider Starry Group.
Related: Troubled wireless technology pioneer files Chapter 11 bankruptcy
Bankruptcy filings are also ramping up in 2024, as Airspan Networks Holdings MIMO on March 31 filed for a prepackaged Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware with a plan to hand majority ownership to its senior secured prepetition lender Fortress Investment Group.
The debtor in the latest telecom bankruptcy, however, might not be as lucky as Airspan.
Casa Systems files bankruptcy to sell all of its assets
Casa Systems (CASA) , a leading provider of physical and cloud-native infrastructure technology solutions for wireless, cable and fixed broadband networks, on April 3 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, seeking approval of sales of its assets and a plan of liquidation to wind down the company's operations.
The Andover, Mass.-based communications technology company reached a restructuring support agreement with the ad hoc group of holders of the debtor's superpriority term loan claims and sub term loan claims. The debtor also entered into an asset purchase agreement to sell its 5G Mobile Core and RAN businesses, which include its Axyom Cloud Native 5G core software and RAN assets, to Lumine Group, the company said in an April 3 statement.
Lumine Group is a global acquirer of communications and media software businesses.
Casa Systems additionally entered into a stalking-horse asset purchase agreement to sell its cable business to an affiliate of Vecima Networks (VNWTF) , a global leader in delivering scalable software, services, and integrated technology platforms for broadband access and content delivery. The deadline for bids for an auction of the cable assets is May 13, with an auction to be held May 15 if necessary. A sale hearing will be held May 31 to approve a sale with the deal proposed to close June. 6.
Lenders unwilling to provide DIP loan
The debtor's prepetition lenders were unwilling to provide debtor-in-possession financing to fund the Chapter 11 case and also unwilling to allow the debtor to seek DIP financing from a third-party. The Ad Hoc group, however, agreed to allow the debtor to use its cash collateral to fund its Chapter 11 case.
The debtor listed $262.5 million in assets and $315.9 million in total debts in its petition.
Casa Systems faced financial distress caused by shifting market dynamics, customer spending delays, customer losses, the Covid pandemic, substantial debt and the company's inability to meet a liquidity covenant under its superpriority credit agreement in June 2023, forcing it to file bankruptcy, according to a declaration by CFO Edward Durkin filed on April 3.
“Like many in our sector, Casa has experienced a significant decline in revenue and profits due in large part to industry-wide downward capital investment and procurement trends in the cable and telco markets," CEO Michael Glickman said in a statement. "We also have incurred significant investments to bring our 5G Mobile Core and RAN products to market. We believe the sales of our businesses through a Chapter 11 process will maximize value, preserve jobs and minimize disruption for our customers.”
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