XO Communications

(XOXO.OB)

filed a chapter 11 bankruptcy proceeding under which two potential restructurings are outlined, both of which would probably cancel out common stockholders.

XO said the filing, made in bankruptcy court in New York, is limited to the parent company and won't affect its operating subsidiaries or their business with clients and vendors. XO said it has more than $500 million of cash, about $5.4 billion of debt and doesn't expect to lay anyone off.

XO joins a parade of once-highflying telecom companies that have filed chapter 11 under huge debt burdens and amid a deflated competitive landscape for data networks, including

Williams Communications

,

Global Crossing

and

McLeodUSA

.

In one scenario based on an agreement reached last year, XO's largest investor, buyout financier Theordore Forstmann, would invest $400 million into the company, raising his equity stake to 40% from 22%, while bondholders would exchange their debt for an 18% ownership stake and $200 million cash. Forstmann and his partner in the proposal,

Telefonos de Mexico

( TMX), have recently indicated that various conditions required for its consummation have not been met and have asked out of it.

XO said it currently has no plans to terminate the pact and doesn't think Forstmann and Telmex are entitled to end it unilaterally.

Nevetheless, XO's filing includes a second plan in which it would reorganize as a standalone company, converting $1 billion in loans under the secured credit facility into common equity and $500 million of pay-in-kind junior secured debt. A committee of lenders under the secured credit facility has indicated that it is prepared to support, and recommend that the lenders under the secured credit facility approve, the stand-alone plan. The second plan would be pursued if the first one was rejected and nothing better emerged, the company said.