Global Crossing goes after XO
The bankrupt high-speed network provider files a lawsuit against XO Communications, according to a court filing.
In its lawsuit, Global Crossing said it entered into an agreement with XO to use some of XO's network to provide services to customers in areas where Global Crossing had no service of its own.
"This action...left a number of Global Crossing's key customers operating their businesses without any long-distance services," Global Crossing said in its filing, noting that more than 120 U.S. customers used XO's network.
The suit alleged that XO was retaliating for a decision by Global Crossing to halt services to it on Feb. 28 for nonpayment of a delinquent bill.
Under the terms of that agreement, XO owed Global Crossing $632,165 for using its network to provide services to XO customers where XO had no service of its own.
As Global Crossing started terminating its service to XO, "XO threatened that it would shut off service to Global Crossing," the company said in the filing.
In the filing, Global Crossing asked a bankruptcy judge to order XO to reinstate service to the affected customers immediately.
A Global Crossing representative said the company had no further comment regarding the lawsuit. An XO representative did not immediately return calls for comment.
Global Crossing filed for Chapter 11 bankruptcy protection on Jan. 28 in the fourth largest insolvency in U.S. history. Two of its Asian business partners agreed to pay $750 million to assume control, but that proposal has been challenged by some shareholders who said it does not reflect the fair value of the company's assets.
The company, which rents its network to other carriers and sells services to telecommunications carriers and other businesses, has nearly $12 billion in debt. It faces an inquiry into its accounting practices by the Securities and Exchange Commission, and a similar probe by the FBI.
Money-losing XO in November said Mexican telecom company Telefonos de Mexico and buyout firm Forstmann Little plan to invest $800 million to take control of 39 percent of the voice and data services provider, thereby fighting off a potential bankruptcy. XO also delisted itself from the Nasdaq.
XO and other emerging telecom companies have suffered over the past year on the downturn in the technology and communications markets, slowing demand, and a marked tightening of capital markets as investors shy away from funding money-losing upstarts.
Recent reports, however, have suggested that XO could still file for Chapter 11 bankruptcy protection within the next couple of weeks in a bid to convince debt holders to agree to its restructuring plan.
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