Court approves Netbeam reorganization
SUMMIT COUNTY – A U.S. Bankruptcy Court judge approved the reorganization plan of Breckenridge’s Netbeam, paving the way for the Internet service provider to merge with its sister company and expand operations with new investors.
Despite continued objections from a group of prospectors interested in the company’s customers and assets, Netbeam’s Chapter 11 reorganization plan was approved, aided substantially by settlement agreements with the company’s two largest creditors and an infusion of investment from a Front Range tech company.
Netbeam filed for Chapter 11 bankruptcy protection in July 2001, two years after being founded in Summit County by husband-and-wife team Greg Friedman and Judith Mercer-Friedman and many private investors. Before the company’s financial troubles, which included cash flow problems, service outages and unpaid employees and vendors, the wireless Internet service and technology provider had attracted substantial investments, including a multi-million dollar stake from telecom magnate TCI Satellite Entertainment (later absorbed as John Malone’s Liberty Satellite and Technology).
According to the reorganization plan approved Friday, the sixth such version offered to the court, Netbeam will repay about $255,000 of the $3 million in debt claims over the next several years.
Liberty Satellite withdrew its objections and approved the bankruptcy reorganization in exchange for a seat on the board of directors of the merged Netbeam-Peak Speed company, according to court documents.
The U.S. Trustee in the case changed her objections to a confirmation of the reorganization in light of new investment that would allow Netbeam to pay off the debt claims. Rock Solid Broadband, an Aurora-based Internet company, invested $250,000 in Netbeam in exchange for a 30 percent stake in the Netbeam-Peak Speed merger. The trustee also stipulated that Friedman not be allowed to serve as an officer of the merged company and that his wife would not be allowed to sit on the company’s board.
“I am delighted that this chapter is finally closed,” Friedman said in a statement Friday. “It has been a long road for us and all the Netbeam customers. Thank you to all our customers and creditors who stayed with us and worked with us over the last two and a half years.”
Friedman will maintain a 35 percent stake in the company through his family’s JGF Family LLP company and serve on Peak Speed’s board. The board will also consist of president Robert Bowen, executive vice president of Rock Solid, with 30 percent equity for its investment; treasurer Robert Pulcipher, who holds a 20 percent interest in Peak Speed with fellow investor Alan Peryman; and a representative from Liberty Satellite, which holds 15 percent equity in the company.
To the last, a group called NB Associates objected to the reorganization. The prospective buyers of Netbeam purchased a thousand-dollar claim against Netbeam from the former Breckenridge Lock and Key for a little more than $200.
Attorneys for Netbeam said the group was attempting to thwart the company’s reorganization and possibly force the company into a Chapter 7 liquidation to acquire Netbeam “for a song.”
In its final objection to the reorganization plan, NB Associates’ attorney, James Burghardt, noted that the approved plan returns Netbeam “ironically close to where it was in the year preceding (its) bankruptcy filing.”
Friedman has argued that much of Netbeam’s problems arose during a period when he was removed from the company’s board and an LSAT executive was running the company.
The Rock Solid-Peak Speed-Netbeam group also recently announced its plans to provide telephone service to current and new customers.
“We look forward to moving ahead with the reinvigorated company to provide service to the residents of Western Colorado, Utah and Arizona,” Bowen said in a statement. “Now it’s time to go to work.”
Peak Speed also will have to complete a government contract by the first of the year. The company earned a $456,000 contract from the Summit County Telecommunications Consortium, the group of local government and business officials that negotiates with cable and other service providers on behalf of the county. The state-funded contract is part of the Beanpole Project, an effort to connect rural municipal and nonprofit offices with the state’s high-speed, fiber-optic network. The project, involving construction of radio towers for wireless transmission around the county, was scheduled to be completed in May, but is now slated for the first of the new year.
– 1999, June – Netbeam begins operation in Summit County, founded by Greg Friedman, his wife Judith A. Mercer-Friedman, other family members and private investors. Based in Breckenridge, the company offers high-speed, wireless Internet access.
– 2000, January – Netbeam executives announce financing has secured $2 million in investments, with as much as $20 million possible thanks to infusions from the former TCI Satellite Entertainment.
– 2001, May – Numerous Netbeam subscribers complain of lack of Internet service. Company officials report technical problems, but employees report massive lay-offs. After a Summit Daily News story reporting the complaints, Netbeam employees in Arizona and Utah, in addition to local workers, report being unpaid.
– 2001, May – Bernie Zurbriggen, chairman of the telecommunications consortium, quits as a board director for Netbeam, foregoing his private financial investment.
– 2001, June – Attorneys file class action suits against Netbeam and its officers on behalf of employees who claim they are owed back wages and benefits.
– 2001, June – Greg Friedman files papers with the Secretary of State forming Peak Speed Communications, another Internet company. Friedman is listed as the sole director with 1,000 shares of stock.
– 2001, July – Netbeam files for Chapter 11 reorganization in U.S. Bankruptcy Court.
– 2001, August – The Summit County Telecommunications Consortium issues a request for proposals from companies capable of installing high-speed Internet infrastructure. Qwest, Denver-based Brunetti DEC and Netbeam submit bids. After consortium members raise concerns about Netbeam’s bankruptcy proceedings, Peak Speed takes over the bid.
– 2001, October – Netbeam continues to operate its Internet service and erects a new transmission tower on Baldy Mountain.
– 2002, August – The Summit County Telecommunications Consortium unanimously votes to award Peak Speed the contract for the Internet project.
– 2002, August – Documents recorded with the Secretary of State’s office show the initial 1,000 shares of Peak Speed stock have increased to 500,000 shares.
– 2002, October – Documents recorded with the Secretary of State’s office show Peak Speed stock shares have increased to 1,000,000 shares.
– 2002, November – Attorneys representing former Netbeam employees in class-action lawsuits reach a $150,000 settlement with a former Netbeam board member and a $200,000 settlement with Netbeam’s insurance carrier.
– 2003, April – Netbeam submits its fifth plan for bankruptcy reorganization. The previous four were rejected by a committee of creditors.
– 2003, May – The initial deadline for substantial completion of the Internet project passes.
– 2003, May – The Friedmans make their first appearance before a planning commission seeking approval to construct two of six towers in the Internet project.
– 2003, June – County officials review the status of the Beanpole Project and contract with Peak Speed. Officials express comfort with the safeguards and protections built in to the contract.
– 2003, July – Expected completion date for construction of the transmission towers in the Internet project passes. Completion set for first of the new year.
– 2003, August – The bankruptcy court judge orders an accountant to examine the financial paper trail between Netbeam and Peak Speed. The examination results in restatements of cash positions against Netbeam, reveals double-bookings of sales and other problems, but does not clear up payments made to company insiders.
– 2003, October – The bankruptcy court judge approves a settlement between Netbeam and Qwest, a creditor in the case owed more than $1.3 million. The settlement outlines a payment plan over the next two years and allows Netbeam to continue obtaining Qwest contracts.
– 2003, November – Netbeam officials surprise the bankruptcy court with an 11th-hour deal with Rock Solid Broadband. The Front Range company agrees to invest $250,000 to pay off its debts. The company also hires Greg Friedman as a consultant.
– 2003, November – Netbeam reaches a settlement with LSAT. In withdrawing objections to the reorganization, LSAT earns a seat on Netbeam’s board. The U.S. Trustee also withdraws objections, so long as Friedman is not allowed control of the company.
– 2003, December – The bankruptcy court judge approves Netbeam’s reorganization plan.
Reid Williams can be reached at (970) 668-3998, ext. 237, or email@example.com.
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