Vermont PSB won't accept FairPoint's bankruptcy plan

FairPoint Communications' (FRCMQ.PK) drive out of bankruptcy hit a speed bump this week as the Vermont Public Service Board (PSB) rejected the ILEC's reorganization plan.

An obvious reason that played into Vermont's decision was FairPoint's inability to meet the broadband expansion obligations set as one of the conditions the service provider needed to meet in order to purchase Verizon's New England lines in 2008. In May, FairPoint asked regulators in Maine, New Hampshire and Vermont to extend the deadline of the first phase of its broadband expansion plan.

It appears that the Vermont PSB, which previously investigated whether they should revoke FairPoint's license to operate in its state, does not have faith in the ILEC's plan.

In a 96-page order, the Vermont board said that "based upon the record before us, we cannot find that FairPoint has demonstrated the financial capability to meet its obligations under Vermont law and its (state license) as a telecommunications carrier." The board added that FairPoint's plan seemed overly optimistic and that it "has provided virtually no explanation as to why its projections are reasonable."

Vermont's decision puts FairPoint's plans into a state of limbo. Last week, the Maine PSC approved FairPoint's reorganization plan, while New Hampshire has not given its decision yet.  

Although the Vermont PSB may finally be standing up to FairPoint, Vermont state Sen. Vincent Illuzzi, an early critic of the acquisition, said that its actions are too little, too late.

"It's interesting that the Public Service Board is now being tough on FairPoint. It should have been tough on FairPoint when it first proposed purchasing the assets from Verizon," he said.

For more:
- AP covers Vermont's decision

Related articles:
Maine PUC approves FairPoint's reorganization plan
FairPoint's Vermont network problems continue to swell
FairPoint's Chapter 11 plan gets support from creditors, lenders
Judge approves FairPoint's reorganization plan
FairPoint wants extension for broadband expansion
FairPoint files for Chapter 11 bankruptcy protection

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