Flag files for Chapter 11

Submarine long-haul carrier Flag Telecom has filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the Southern District of New York.

The filing is the latest in a string of bankruptcies in the long-haul sector, which has been struggling for months under light demand and high debt loads. In Flag’s case, the long-term debt at the end of 2001 more than $1.3 billion, while the company’s revenue for the year was $188.3 million.

The decision to file for Chapter 11 protection came as a result of the acceleration of bank debt of Flag subsidiary Flag Atlantic.

Flag’s board has authorized management to negotiate a financial restructuring with the company’s creditors. In the interim, the company said it plans to continue operations while reducing expenses and conserving capital. A Flag spokesman declined to give details on what actions this would involve.

“We’re going to do all we can to tighten our cash flow management and increase the efficiency of the business,” he said.

--Toby Weber, Staff Writer