NorVergence will voluntarily seek Chapter 11 bankruptcy protection, a lawyer for the troubled Newark telecommunications company said during a hearing yesterday.
Speaking before a judge in U.S. Bankruptcy Court in Newark, Bruce Buechler said NorVergence "is going to be a Chapter 11 case in a matter of days." Because of mounting pressure from creditors, the company also has fired "90-plus percent" of its staff and needs time to reorganize, he said.
NorVergence, which resells telecommunications service mostly to small businesses, was forced into court by an involuntary petition for Chapter 11 bankruptcy by three of its creditors last week.
Qwest Communications sought yesterday's hearing in attempt to sever its ties with NorVergence. Had the Denver-based company succeeded, many of the services NorVergence provides would no longer be active, which would have resulted in lost service for NorVergence's customers.
Judge Rosemary Gambardella gave NorVergence until 10 A.M. Wednesday, when another hearing is scheduled, to address how it will tackle mounting debts and pending Chapter 11 status.
Lawyers for Denver-based Qwest, which is owed $15 million by NorVergence acknowledged receiving $1.1 million from the company shortly before the hearing. But Qwest's lawyer, Jack Zackin, said the telecom giant needed to be paid in full.
NorVergence's attorneys and some of its other creditors argued that granting Qwest's motion to end its agreement would doom NorVergence. It would also allow Qwest to terminate service to thousands of NorVergence customers without warning.
NorVergence acknowledged at least $30 million of debt in court yesterday.
Other companies including Sprint and T-Mobile are also owed millions of dollars.
In addition to representatives from some of NorVergence's creditors, approximately 20 former employees came to yesterday's hearing. Dressed casually, a handful of the employees complained about bounced and missing paychecks.
"I hear these large companies throwing out large numbers out there, " said Charles Brown, a former employee. "I just want what is owed to me."
Peter Salzano, NorVergence's chief executive, showed no emotion during yesterday's hearing. As former employees spoke, Salzano sat stone-faced behind Buechler, his hands crossed and his head cocked to the left.
He had no comment after the proceedings.
Former scammed employee!!!
Newark, NJ
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