Winstar Files For Bankruptcy, Sues Lucent for $10 Billion
TSC Staff
04/18/01 - 09:59 AM EDT
Winstar Communications (WCII Quote) voluntarily filed for protection under Chapter 11 of the bankruptcy code, and the company filed a $10 billion lawsuit against
Lucent Technologies (LU Quote), alleging that the telecom equipment maker didn't live up to the obligations of a supply agreement between the companies.
The broadband communications company said the bankruptcy filing won't affect its day-to-day operations. Winstar arranged a debtor-in-possession financing pact with an initial commitment of $75 million from a group of banks including
CIBC,
Citicorp and
Credit Suisse First Boston. The commitment may be increased to as much as $300 million.
As for the lawsuit, Winstar alleged that Lucent didn't meet the terms of an agreement in which it was set to provide Winstar with equipment and financing to build a broadband network. Winstar also said Lucent failed to pay the company more than $90 million, which was due March 30, as part of a vendor financing agreement.
Shares of Winstar closed regular
Nasdaq trading at 14 cents Tuesday. The 52-week high is $45.50.
