Genuity Says It May Seek Bankruptcy Protection

Genuity Inc., a seller of high-speed Internet access, has “substantial doubt” about whether it can keep operating and may seek bankruptcy protection, it said in a U.S. Securities and Exchange Commission filing.

Genuity, which last month defaulted on $3 billion in loans, cited the default in the SEC document as a possible reason it may seek bankruptcy protection. It also has incurred “significant losses and negative cash flow from operations,” which it expects to continue.

The Woburn, Mass.-based company defaulted on the loans after Verizon Communications Inc. decided not to buy back a controlling stake in the money-losing data-network operator. Genuity was spun off from GTE Corp. in 2000 to win regulatory approval of Bell Atlantic Corp.’s merger with GTE. Verizon was the product of the combination and had the option to reacquire Genuity by June 2005.

Shares fell 4 cents to 31 cents on Nasdaq.