Four months into bankruptcy, troubled WSNet Inc. has decided to liquidate and
shut down operations by the end of the month.
WSNet -- which provided digital programming and transport services to small
rural cable operators and to 650,000 customers in apartment buildings -- plans
to shut down its digital service Feb. 28.
J. Maxwell Tucker, an attorney for WSNet, said in court transcripts that the
company hopes to sell the analog multiple-dwelling unit business soon.
WSNet had hoped to make a business of aggressively delivering digital cable
to the rural masses. But given the high service costs and debt, the business
model simply didn't work.
The company filed to reorganize under the bankruptcy code's Chapter 11 in
October.
Just before the filing, Digital Satellite Lenders LLC, its primary banker,
swept WSNet's bank accounts of $8 million, leaving the company with no cash.
Although it is in default on several loan covenants, WSNet secured $2 million
in debtor-in-possession financing that was to come due in less than 90 days.
Some customers were optimistic that WSNet could right its sinking ship.
But according to its latest filing with the bankruptcy court, WSNet was
taking in roughly $4.8 million per month in revenue and paying out $5.4 million
each month in operating costs.
