Court clears Williams to proceed

In yet another step in the legal process to survive bad finances, the U.S. Bankruptcy Court in the Southern District of New York has approved Williams Communications’ reorganization plan. Once some administrative and regulatory issues are resolved and approvals come from the FCC, Williams plans to emerge from bankruptcy in October.

“This confirmation puts the company one step closer to an Oct. 15 emergence from Chapter 11,” said a Williams spokeswoman. “In the meantime, we are working to get a temporary license for the new company from the FCC.”

Despite talk around the industry that many pre-bankruptcy equity holders were angry with which parties were paid first, Williams had “overwhelming support from its unsecured creditors and secured lenders,” the company said in a statement.

The plan calls for unsecured creditors to receive 54% of the equity of the new company. Williams’ new investor Leucadia National, which is investing $150 million in Williams and paid $180 million worth of claims to The Williams Companies, will take a 44% equity stake.

In addition to the equity breakdown, the restructuring plan also calls for a new nine-member board of directors to be formed. Four of those directors will be chosen by a committee for the unsecured creditors, and four will be chosen by Leucadia and CEO Howard Janzen.

The new company will be incorporated in Nevada and headquartered in Tulsa, and will transition to the WilTel name.

Williams also recently had another victory in court with its partner SBC Communications. SBC had expressed interest in “exercising its rights” with regard to the Master Services Agreement between the companies. Both companies agreed to drop their litigation against each other.