Youth-oriented mobile operator Amp’d Mobile has filed for Chapter 11 bankruptcy protection. According to a statement from Amp’d Mobile, the company’s infrastructure hasn’t been able to keep up with customer demand, and the Chapter 11 filing is a way for the company to restructure its business, with the expectation it will resume normal business operations. The Wall Street Journal (subscription only) reports the company wasn’t able to raise enough money to keep up on its debt payments.
Amp’d Mobile operates as an MVNO—mobile virtual network operator—operating on Verizon’s mobile network. The service has been operating for about a year and a half.
Amp’d investors include MTV and Universal Music Group, and targets technologically-hip young consumers via music promotions, media-centric devices and services, and by sponsoring youth-oriented action-sports events.
A bankruptcy filing will likely enable the company to shake much of its estimated $100 million in debt (including substantial sums owed to Verizon and Motorola), but will also likely consume ownership stakes and preferred stock owned by investors and key executives.
Amp’d describes its top management team as remaining “largely intact;” reports in recent weeks have pointed to a possible rift between CEO Peter Adderton and Amp’d’s directors; the company has also had issues with COO Susan Swenson, who’s move to Amp’d from T-Mobile was delayed in 2005 by a judicial ruling which found she’d violated a non-compete clause with her former employer, T-Mobile.
Amp’d says it is working with one of its largest investors to obtain debtor-in-possession financing.
