February 27, 2019 News:
Following a recent $310 million judgment in favor of bondholder Aurelius Capital Management, Windstream Holdings Inc. filed for Chapter 11 bankruptcy protection on February 25.
The bankruptcy filing, which was widely expected given the recent Aurelius judgment (which Windstream has since appealed), alongside more than $5.8 billion in debts that the rural phone company had racked up over the last several years, means that Windstream will continue operating through a multi-year financial restructuring plan.
As with virtually all bankruptcy filings, the only winners in this disaster will be select Windstream executives and managers, who will keep their jobs and perks. The vast majority of other stakeholders—namely debtholders, investors, employees, and customers—will not be as fortunate.
Investors and Debtholders
With respect to debtholders, some will eventually get paid pennies on the dollar, while others will be completely out of luck. Investors will be in for a rougher ride, as Windstream’s stock price (NASDAQ: WIN) dropped a further 46.7% at the close on February 25 after trading resumed. As of noon on February 26, the stock was trading at $0.46 a share. To put this in perspective, in July 2014, the stock was trading at $82.79 a share.
Employees
Windstream employees — and many soon-to-be ex-employees — will also bear the brunt of the bankruptcy filing. Comments at TheLayoff.com paint a very dire and gloomy picture for loyal, hard-working employees who had absolutely nothing to do with Windstream’s billion-dollar 2017 merger with Earthlink and subsequent sell-off for $330 million in 2018 or for guiding the company to, as the court recently put it, “breach its financial covenants” by improperly transferring assets when it spun-off its internal real estate investment trust Uniti Group in 2015. Some employee comments include:
- “If only upper management would have opened their ears and listened to the employees who have worked in this industry for years, I doubt Windstream would be in this predicament. Experienced, knowledgeable, and dedicated employees kept trying to wake up upper management, and it is relevant that our upper leadership chose to turn the cheek. We knew purchasing some of these companies and placing their leaders in key roles would run Windstream into the ground; what a shame. So disheartening!”
- “Don’t believe the lies. If you think everything is going to be okay, well, it’s not. Don’t get blindsided and not have a job. I turned in my notice today.
- “The voluntary reorganization is almost as bad as the company liquidation. Voluntary reorganization in these circumstances means cutting the company structure to the bone. They want to trim the organization to the biggest, physically possible degree. In translation, for most of us, we will get cut. This is almost as bad as total liquidation. I think we need to be prepared. Good luck to you all.”
At DigitalPhone.io, we wish all affected Windstream employees and their families strength and perseverance during this challenging time. If there is a silver lining here (and it is frankly hard to find one), then it is that some people discover that a layoff boosts their career. Here is an article looking more deeply into this possibility and offering practical guidance.
Customers
The impact on Windstream customers is not clear yet. While the company will remain operational during its restructuring, the mass layoffs (or voluntary resignations — essentially the same thing) will temporarily adversely impact service quality and standards.
However, it is also part of the story to note that Windstream does not enjoy an excellent reputation for customer service. All review sites rank Windstream between 1 and 2 stars out of 5, with many angry current and ex-customers commenting that they would give zero stars if they could. Here is one comment from an angry ex-customer posted on Spiceworks, which is a social media platform for IT professionals:
Windstream has the worst support EVER. Put on hold for hours then get the wrong person to talk too. Then I get a person I get disconnected !!! Issues for years with internet, finally half way descent but now MY BUSINESS PHONE SERVICE GOES OUT FOR THE SECOND TIME IN TWO WEEKS!! I’M LOSING BIG TIME BUSINESS BECAUSE OF IT. I HAVE A RADIO CAMPAIGN GOING ON AND NEW POTENTIAL CUSTOMERS CAN’T CALL ME. I HAD ONE CUSTOMER TELL ME THEY THOUGHT I WAS OUT OF BUSINESS. WHICH I WILL BE WITH WINDSTREAMS PHONE SERVICE. TOTALLY UNACCEPTABLE!!!! I WOULD GIVE YOU “0” STARS IF I COULD!!
This means that for many unsatisfied customers—both residential and business—the level of service and support will likely go from bad to worse long before it (maybe) gets better. That is a tough pill for customers to swallow and, frankly, a bad bet. Nothing in Windstream’s press releases or public statements acknowledges that poor customer service was and remains a big part of the company’s legacy of problems.
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