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KPNQwest shutdown averted yet again

The liquidators and staff of the bankrupt company reach a compromise that aims to keep the network online for the rest of the month.

Just hours before a deadline set by former KPNQwest staff, liquidators for the bankrupt service provider reached an agreement that should keep the network online--albeit only until the liquidators' own deadline of June 30.

Liquidators confirmed after the Friday deadline that the network would be kept online, probably for the rest of June, because a deal had been struck with disgruntled former employees of KPNQwest.

The liquidators want the network kept live until the end of June to maintain it as a marketable asset. However, the staff, who have gone without pay since they were laid off by the bankrupt service provider--yet have continued to keep the network running--demanded that all should be paid, or the network would be shut down Friday, leaving the liquidators with a much less salable asset.

The employees have settled for a deal that guarantees to pay 70 of them for the next two weeks; that's short of the 350 employees they were reportedly hoping to keep.

"I think the staff were naive to make the threat, but it is very difficult for us on the outside to know what is actually going on," said Allen Timpany, chief executive of Vanco, a packaged network operator.

Like most operators, Timpany is confident that a KPNQwest shutdown, if it does occur, would have little effect on Internet performance or on individual consumers who have a sensible strategy. "Users should have a conventional disaster recovery plan in place, which would also cover economic disaster at their suppliers."

Large providers like British Telecommunications and Sprint are lining up to offer service to KPNQwest customers, but the salvaged remains of the business, from a network once valued at $39.7 billion, may be small. "We have picked up tens of customers, in contracts worth tens of millions of dollars," said Chris Clark, president of carrier services at BT Ignite. "Figures of ($473 million) have been quoted for KPNQwest's turnover, but around 70 percent of that was from the parent companies and is not business we can win. My gut feel is we are all chasing about" $94.6 million to 189 million.

ZDNet U.K.'s Peter Judge reported from London.