Thrifty Tel Inc. Seeks Protection of Chapter 11

Thrifty Tel Inc., a long-distance telephone company that tried to crack the market with an unusual flat-rate pricing scheme, filed for Chapter 11 bankruptcy Friday.

The company said in a statement that the Chapter 11 proceeding, under which a company gains protection from creditors while it attempts to work out a reorganization plan, was required because of “cash flow problems due to severe difficulties with its billing system.” The company added that it believes the billing problems have been corrected, and that it expects to continue operating and emerge from Chapter 11 in the “very near future.”

Company officials could not be reached for further comment.

Thrifty Tel, traded as an over--the--counter “pink-sheet” stock, reported net income of $57,000 on $1.6 million in revenues for the quarter ended Aug. 31.

Like many other small long-distance companies, Thrifty Tel leased lines from the large telephone carriers and then resold service to customers. But unlike the others, Thrifty Tel offered a flat-rate pricing system under which customers paid $200 per month for unlimited long-distance service, or a flat per-minute rate, payable in advance.