“The news from the telecom industry will remain unrelentingly negative until a cyclical upturn is in sight possibly not until 2003. In the interim the telecommunications sector will be entering a build-buy or be bought phase where consolidation, restructuring and more than a few bankruptcies can be expected.”

The problems of the telecom industry are driving more and more of its constituents into bankruptcy court. And, they are not coming in willingly, but kicking and screaming and more than a little too late to be reorganized. A telecom bankruptcy is likely to be a quick sale or an even quicker sale scenario with many, many operational issues along the way. More than a few telecom companies have filed chapter 11 only to convert or dismiss only a few months later. The successes are small in scope and far between.

This paper is intended to provide some of the historical backdrop behind the recent evolution of the telecommunications industry and some of the bankruptcy issues that are both prevalent in and unique to telecom bankruptcies. But perhaps the most important lesson learned from telecom and high tech bankruptcies generally, is that cash flow is hugely negative and, with all lifelines extinguished, the runway is extremely short. If the company has enough foresight to come in with a even few months of cash left, it is a good day.