NEW YORK (CNNfn) - Struggling Internet service provider PSINet Inc. said Friday it has filed for Chapter 11 bankruptcy protection as its total liabilities nearly doubled its total assets.|
PSINet had said in April that it was likely to file for bankruptcy because of a cash shortage.
At the time of the filing, the Ashburn, Va.-based company had total assets of $2.2 billion and total liabilities of $4.3 billion, of which $2.9 billion is bond debt. When a company files for protection under Chapter 11, it is protected from creditors while it tries to reorganize its business and work out a plan to pay its debts.
The company said its filing with the U.S. Bankruptcy Court in New York also covers 24 of its operating subsidiaries in the United States, while four Canadian subsidiaries also have filed for protection in the Ontario Superior Court of Justice.
PSINet said the move will not affect its service to customers, and the company will focus on restructuring efforts.
"Our existing capital structure did not permit us to respond to the rapid changes in our markets. We expect that the steps we are taking today will provide us with the flexibility and time to explore all strategic alternatives while we continue to deliver the reliable service upon which our customers depend," PSINet President and CEO Harry G. Hobbs said.
PSINet spokesman Jim Lucas said the company's position regarding their sponsorship of the Super Bowl champion Baltimore Ravens' stadium has not changed.
"We are unsure how or if our reorganization will affect our business relations with the Ravens," Lucas said.
A spokesman for the Ravens also said the companies' relations remains the same.
A source close to the situation told CNNfn the team is not currently negotiating with other companies and there is no sense of urgency in looking for stadium sponsorship.
-- from staff and wire reports