Indebted ICG Files for Bankruptcy Protection

ICG Communications Inc., a telecommunications upstart that had been a darling of industry barons, filed for protection under Chapter 11 of the U.S. Bankruptcy Code, facing a mountain of debt and operational difficulties. The Englewood, Colo.-based company, which sells telephone and Internet connections to businesses and homes, has faced complaints about service, plummeting profit, management turmoil and lawsuits from irate investors in recent months. An analyst said ICG also was caught in a harsh change of market sentiment as Wall Street turned its back on companies that failed to deliver on promises of rapid growth. Randall Curran, who took over as ICG’s chief executive in late September, said in a statement that the company had enough money to carry out its current restructuring. In September, ICG warned that its profit and revenue would be significantly lower than expected because of such problems as network outages and other technical failures. ICG filed a bankruptcy petition with the U.S. Bankruptcy Court in Delaware. Bankruptcy under Chapter 11 of the U.S. Bankruptcy Code frees a company from the threat of creditors’ lawsuits while it reorganizes its finances. ICG’s shares were halted on Nasdaq ahead of the announcement. The last price was 31 cents, about 99% off the stock’s record high of $39.25 in March. The company said it had secured $350 million in new financing from Chase Manhattan Bank.