Global Sues Rival to Restore Service
Many of Global Crossing Ltd.’s key U.S. customers have been without long-distance service since Friday, when a rival phone carrier cut off Global’s access to its network as part of an escalating dispute between the two firms.
The move by XO Communications Inc. marks the first major service disruption for Global Crossing customers since the Bermuda-based company filed for bankruptcy protection Jan. 28. If services are not restored quickly, the dispute could further spook Global Crossing customers and undermine efforts to resuscitate the telecommunications company.
Global Crossing fought back Tuesday with a lawsuit against XO that seeks an immediate injunction from a bankruptcy judge ordering XO to reinstate service to the affected customers. Global Crossing said more than 120 U.S. customers--including several unidentified “key” customers--were hooked up to Global Crossing services through lines provided by XO, according to the lawsuit.
Neither company responded to questions about the lawsuit. In court papers, Global Crossing said XO was acting in retaliation for a decision by Global Crossing to halt services to XO on Feb. 28 for nonpayment of a delinquent bill of more than $600,000.
Without the court’s intervention, the affected customers would have to wait up to 45 days for substitute connections to Global Crossing or seek service from a competitor, the company said. Other customers, fearing a similar disruption, probably would seek alternative service as well, causing irreparable harm to Global Crossing, according to the suit.
Also on Tuesday, Rep. Louise McIntosh Slaughter (D-N.Y.) said she received word that a House Financial Services subcommittee would hold hearings examining the accounting practices at Global Crossing and other companies. The telecommunications firm’s accounting methods are under investigation by the Securities and Exchange Commission and the FBI.
In addition, Citizens Communications Co. sued Global Crossing on Tuesday, saying that it stood to lose more than $400 million if the fiber-optic telephone network operator wasn’t ordered to abide by an agreement between the two companies.
Stamford, Conn.-based Citizens agreed in July 2000 to buy most of Global Crossing’s local phone business, Frontier Corp., for about $3.5 billion. Citizens said in a lawsuit filed in U.S. Bankruptcy Court in Manhattan that it could suffer the loss if Global Crossing didn’t make certain Internal Revenue Service filings agreed to by the two companies.
Neither company returned phone calls seeking comment.
Continuing a string of changes on the boards at both Global Crossing and subsidiary Asia Global Crossing, Global Crossing Chief Executive John Legere resigned from the Asia Global Crossing board. He was replaced by Carl Grivner, chief operating officer of the parent company. Asia Global Crossing also named a new board member, Jose Antonio Rios, as president of Global Crossing International.
Also Tuesday, the judge handling Global Crossing’s bankruptcy case postponed a Thursday hearing that would have addressed concerns about a proposed investment by Hutchison Whampoa and Singapore Technologies. The hearing, which also will address procedures for competing bids for Global Crossing, will be held March 13.
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Bloomberg News was used in compiling this report.
