YIPES NEARS DEBTOR-IN-POSSESSION RULING

While Judge Dennis Montali mulled Yipes' debtor-in-possession (DIP) financing proposal in federal bankruptcy court for the Northern District of California late last week, other carriers considered bids to acquire the troubled firm.

Sources who declined to be identified said up to three carriers, including Cable & Wireless, may file bids to acquire all or part of Yipes' assets. Yipes, which has maintained that it will use DIP financing to emerge from bankruptcy with a restructured company, could not be reached for comment.

Judge Montali is expected to make a ruling this week on the company's DIP proposal. Other prospective acquirers have until May 28 to file their bids with the court.

An asset auction is scheduled to commence the week of June 3.

However, Dave Schaeffer, CEO of Yipes competitor Cogent Communications, said he doubts an outside suitor will swoop in and acquire Yipes. “We took a look at the assets, but they are [primarily] all leased. I'd be amazed if anything happens,” he said. “There is nothing there to buy.”

Yipes also could not be reached for comment concerning the apparent departure of industry luminaries Robert Metcalfe and Nick Lippis from the company's advisory board. Their photos and biographies were removed from Yipes' Web site.

Lippis could not be reached for comment, but Metcalfe said he asked to be removed as an advisor because Ron Young, the Yipes executive who recruited him to the board, had himself departed the firm. “My connection to Yipes was broken,” he said. “[But] I hope the company is able to find its way back.” Yipes heavily promoted Metcalfe's affiliation to the company when he joined last fall.

Another Yipes advisor, consultant David Isenberg of isen.com, said the advisory board never actually met as a group.