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Clearwire Says Bankruptcy Is An Option

Posted By admin || 20-May-2011

clearwire and bankruptcy Clearwire's Chairman and interim chief executive officer of Clearwire, John Santon, has announced that bankruptcy is an option for the high speed internet provider which has fallen short on capital and is in the process of retrenching. However, Santon is seriously mistaken in the way he describes the bankruptcy option available to his company. "Bankruptcy is always an ugly option," he said. "That dynamic is not in the best interest of the shareholders," Stanton said. The reason Clearwire even is talking about that possible contingency is that it is a public company and already knows it will run out of operating capital by the end of 2011 unless new investment can be found. The company currently does not foresee reaching a break even position, on an operating cash flow basis, until sometime in 2012.

While an orderly bankruptcy will not fatten the pockets of shareholders, it will allow the company to salvage the viable aspects of its business. As Santon has clearly stated, Clearwire is aware that it may run out of cash if there are no new investors coming to the table with capital. This knowledge gives the company an opportunity to not only acknowledge that bankruptcy is an option but to begin creating possible scenarios and strategies which will allow the company to survive a Chapter 11 bankruptcy restructuring. A matter of fact, it may have been more prudent for Stanton to describe the company's bankruptcy option as an opportunity for the company to regroup and survive allowing shareholder to make even greater profits in the future.

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