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CHARLOTTE, N.C. (

TheStreet

) --

FairPoint Communications

(FRP)

announced that it filed for Chapter 11 bankruptcy protection on Monday, a long-awaited move after the company was crushed under the weight of its mounting debts.

Last year, FairPoint bought

Verizon's

(VZ) - Get Verizon Communications Inc. Report

northern New England-based land-line business in New Hampshire, Maine and Vermont for $2.3 billion. Since the conversion from Verizon's systems, FairPoint has been plagued with customer complaints and quality concerns.

While FairPoint was conducting ongoing discussions with debt holders to restructure terms, last week Governors from the three states sent a letter to the telecom expressing concern that the company should prioritize customer service and infrastructure improvements as a part of the negotiations.

In a press release issued Monday morning, FairPoint said its accompanying restructuring plan -- with the blessing of lenders holding more than 50% of the debt under the company's secured credit facility -- will likely shrink the company's debt load from around $2.7 billion to about $1 billion.

Under the plan, about $1.1 billion of debt under the credit facility will be converted into equity, giving the credit facility lenders about a 98% ownership stake. The plan anticipates that yearly interest will be slashed from more than $200 million to close to $65 million. FairPoint currently has $46 million in cash on hand and said it snagged commitments for a $75 million debtor-in-possession revolving credit facility.

"The day-to-day operations of our business will not be impacted by today's actions," FairPoint CEO David Hauser said in the press release.

The restructuring plan awaits approval by the federal bankruptcy court in the Southern District of New York, where the Chapter 11 filing was made.

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FairPoint, which has already

been warned of delisting because of its low share price -- along with others like

Mesa Air

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,

Sirius XM Radio

(SIRI) - Get Sirius XM Holdings, Inc. Report

and

Champion Enterprises

( CHB) -- was plummeting 17 cents, or nearly 46%, at 20 cents in the morning.

-- Written by Sung Moss in New York

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