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XO Communications gets OK for bankruptcy plan

A U.S bankruptcy court judge approves reorganization plan for phone and Internet services company. Will funding be next in line?

A U.S bankruptcy court judge Monday approved a reorganization plan for phone and Internet services company XO Communications, bringing the company one step closer to securing $800 million in funding.

"It's the next hurdle that we're over," XO Communications spokesman Todd Wolfenbarger said. "We still have to satisfy the regulatory conditions." Wolfenbarger said that once all conditions are met and a contract is in place, the company expects to receive funding from investors Forstmann Little and Telefonos de Mexico.

The funding could still be denied if XO fails to meet all of the conditions of an agreement it struck with Forstmann Little and Telmex in January. A spokesman for Forstmann Little declined to comment on Monday.

Under that pact, which expires Sept. 15, Forstmann Little and Telmex said they would each invest $400 million for a total of 80 percent of XO Communications if the telecommunications provider met a series of conditions. Those conditions included restructuring debt, getting regulatory approval and settling a series of shareholder law suits.

XO Communications, founded by entrepreneur Craig McCaw, filed for Chapter 11 bankruptcy protection in New York on June 17, listing liabilities of $8.5 billion and assets of $8.7 billion.

Wolfenbarger said XO had also settled most of its shareholder suits and received regulatory approval from the Department of Justice for the Forstmann Little plan. He added, however, that the company has yet to get the go ahead from the Federal Communications Commission or from public utility commissions of the multiple U.S states the company operates in.

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