FairPoint Communications will appear before a New York judge this afternoon to begin a Chapter 11 bankruptcy proceeding. The company filed for bankruptcy protection yesterday, about a year and a half after purchasing Verizon's landline network in New Hampshire, Maine and Vermont with high hopes for expanding services and bringing new products to the region.

FairPoint owes about $2.7 billion in long-term debt. It's hoping the judge will approve a proposal to reduce that to $1 billion and convert its lenders to owners of the company.

CEO David Hauser, who joined the company in July, called the filing "good news" that will "make FairPoint more viable and competitive than ever."

"This process is a launching pad for us," he said.

Some of the company's biggest critics changed tone somewhat yesterday as they regrouped to focus on how to get the best result for New Hampshire from the bankruptcy proceeding.

"The focus now is really going to be on ensuring that FairPoint fulfills the promises that it made to the state," said New Hampshire Consumer Advocate Meredith Hatfield.

FairPoint's bank lenders hold about $2.1 billion in debt. Lenders who hold a majority of that debt, led by Bank of America, have entered into an agreement with the company to eliminate $1 billion in debt in favor of obtaining 98 percent of the equity in the company.

The company has proposed extinguishing an additional $570 million in debt in the form of unsecured notes. Those creditors would be given about 2 percent ownership. FairPoint has not reached an agreement with those bondholders.

That share also could be spread among other people FairPoint owes. Yesterday's filing detailed the 50 unsecured creditors to whom FairPoint owes the most money. Not including the bondholders, that totaled $45.1 million.

Among them were the New Hampshire Electric Coop ($417,714); CRC Communications of Maine, a wholesale customer ($582,192); and Capgemini, the company that built FairPoint's faulty computer systems ($19.8 million.) According to the filing, FairPoint has agreed to pay an additional $30 million it owes Capgemini.

The company must submit a full reorganization plan by Dec. 3.

New Hampshire's Associate Attorney General Richard Head and attorney Bruce Harwood, the state's outside counsel who specializes in corporate bankruptcy, planned to be at the 1 p.m. hearing today, where the company's "first day pleadings" to preserve consumer programs and employee compensation and benefits are set to be discussed.

Creditors to owners

FairPoint purchased the northern New England network last spring for $2.4 billion, overcoming opposition from Verizon's unions and consumer advocates. One of three commissioners in New Hampshire voted against it, the only regulator in the three states to oppose the sale at the final decision.

When FairPoint acquired the network, it increased in size fivefold. Some say the lack of experience with such a large operation showed when FairPoint took over operations in January and transferred the system to new computers that were plagued with problems. Regulators saw an unprecedented number of complaints from frustrated customers.

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