Local Business Papers Pick Up the Story

Meanwhile local business newspapers such as the Houston Business
Journal are picking up the local angle to the story: 

Bankruptcy disconnects telecom customers
   by Mary Ann Azevedo

Houston Business Journal

Nearly 1,000 small businesses in the Houston area have been stuck with hefty bills following a bankruptcy filing by a Newark, N.J.-based telecommunications company. 

NorVergence Inc., which had operated a Houston office, sold phone and Internet service to an estimated 947 companies in the Houston area over the past year.

NorVergence filed bankruptcy on June 30 after three of its creditors brought involuntary Chapter 11 proceedings against the company. NorVergence went on to file Chapter 7 bankruptcy on July 14, according to a filing with the U.S. Bankruptcy Court in New Jersey. 

Now, 11,000 small businesses in more than 20 states owe thousands of dollars to third-party creditors for services that they say were not delivered and for equipment that is now inoperable.

NorVergence targeted small business owners with good credit records. The company's salespeople, called screening managers, not only sold telephone and wireless service which the company bought wholesale from large carriers such as Qwest and Sprint -- they also pitched the company's "solution," a box which allocated bandwidth over a T1 line.

What many customers apparently didn't know was that the service was unrelated to the box. And some customers claim the box, which they paid to lease from the company, had no function.

Many customers purchased the box without knowing it could not be used by other phone providers and got locked into five-year leases with a bank, which had purchased the leases from NorVergence.

NorVergence's attorney, Bruce D. Buechler of Lowenstein Sandler PC, did not return telephone calls. A recorded message at NorVergence's Houston office refers callers to Qwest. A recording on the New Jersey phone number for NorVergence alerts callers that the company is in bankruptcy.

Meanwhile, the Houston Chapter of the Associated General Contractors is one organization that says it got burned.

Ada Lam, the chapter's executive director of finance and administration, says AGC was impressed with the idea that it would save $600 a month in telecom bills by switching to NorVergence. But the group quickly realized something