On Monday, Sept. 15, NII Holdings Inc., the primary mobile carrier throughout Latin America, filed for Chapter 11 bankruptcy protection in New York City.
According to the Wall Street Journal, NII Holdings has suffered from an increasingly deteriorating sales performance that has rendered the company unable to make interest payments on its debts. The company currently has more than $4 billion in debt, the Wall Street Journal reports, and skipped a $118.8 million interest payment a month ago.
During a Chapter 11 bankruptcy, a company or organization is able to restructure its debts, affairs and assets with a repayment plan that must be approved by the bankruptcy court.
“If corporate organizations file for Chapter 11, this will allow them a lot more flexibility to restructure their debts,” says Charles H. Huber, Principal of Law Office of Charles H Huber. “Before filing, organizations should try to cut expenses and rework their budget first; try everything possible to avoid bankruptcy.”
Things first took a downward turn at NII Holdings several years ago when its competitors began to offer faster, more functional 3G data services while NII Holdings continued to offer only 2G, the Wall Street Journal reports.
“These actions, in turn, led to lower average revenue per subscriber and an increase in bad debt expense,” Daniel Freiman, treasurer and vice president of corporate development and investor relations for NII Holdings, stated on Monday.
The Wall Street Journal reports that after its Chapter 11 bankruptcy, NII Holdings plans to focus on re-growing its business among customers in what it calls its “core markets”: Brazil, Argentina and Mexico.