Birch Telecom files Chapter 11, CEO resigns

Birch Telecom has filed for Chapter 11 bankruptcy, the competitive local exchange carrier announced today.

Chief Executive Officer Mike Cassity has resigned his post, effective immediately, and has been replaced by Gregory Lawhon, the company’s senior vice president and general counsel. Cassity became CEO a year ago, while Lawhon has worked for Birch since its founding in 1997. Before that, Lawhon worked for a law firm in Birch’s hometown of Kansas City, Mo., specializing in mergers and acquisitions of communications companies.

Birch does not expect its bankruptcy to affect service to its customers and is still taking new orders, it said in a statement issued today.

Earlier this week, the company announced it was cutting nearly 40% of its workforce while it struggled to adapt to a decision from the Federal Communications Commission earlier this year that allowed incumbent carriers to raise their wholesale rates. In July, the company announced staff cuts and closings of sales offices in Texas, Kansas and Oklahoma. The most recent cuts bring Birch’s headcount to 525.

Birch touted a commercial agreement for wholesale services with BellSouth in a January press release, but while the CLEC also had a commercial agreement with SBC, the sales offices it announced closing this month were all in SBC territory.

The company claimed $300 million in revenue last year.