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NorVergence files for Chapter 11 by Christopher Menkin The June 30 involuntary bankruptcy petition record. The three creditors in the petition have claims totaling $1.4 million against the company. Assigned to: Chief Judge Rosemary Gambardella Chapter 11 Involuntary Date Filed: 06/30/2004 Debtor Petitioning Creditor Peter J. Deeb OFC Capital, a Division of ALFA Financial Corporation (See above for address)
Petitioning Creditor (See above for address) Filing Date # Docket Text 06/30/2004 1 Chapter 11 Involuntary Petition. Receipt Number 279051, Fee Amount $839. Filed IN RE: NorVergence, Inc. (ld) Modified on 7/2/2004 TO REFLECT RECEIPT WRITTEN 7/2/04 (ld). (Entered: 07/01/2004) 07/01/2004 Petitioning Creditors, Popular Leasing USA, Inc.; OFC Capital, a Division of ALFA Financial Corporation; and Partners Equity Capital Company, LLC, all represented by Peter J. Deeb added to case. (ld) (Entered: 07/01/2004) 07/02/2004 2 Involuntary Summons Issued Counsel for Petitioning Creditors, Popular Leasing USA, Inc., OFC Capital, and Partners Equity Capital Company, LLC, for service on NorVergence, Inc. Answer to Involuntary Petition due by 8/2/2004. (ld) (Entered: 07/02/2004) 07/02/2004 3 Notice of Hearing for Status Conference: (related document:1 Involuntary Petition (Chapter 11) filed by Debtor NorVergence, Inc.). Hearing scheduled for 8/30/2004 at 10:00 AM at RG - Courtroom 3E, Newark. (rf, ) (Entered: 07/02/2004) 07/06/2004 4 Motion for Relief from Stay. Fee Amount $ 150. Filed by Boris I. Mankovetskiy on behalf of Qwest Communications Corporation. (Attachments: # 1 Application Application in Support of Emergency Motion# 2 Affidavit Affidavit of Andrew Sherman# (3) Affidavit Affidavit of Pamela McCoy) (Mankovetskiy, Boris) (Entered: 07/06/2004) 07/06/2004 Receipt of filing fee for Motion for Relief From Stay(04-32079-RG) [motion,mrlfsty] ( 150.00). Receipt number 0312B3953749, amount $ 150.00. (U.S. Treasury) (Entered: 07/06/2004) 07/06/2004 5 Application to Shorten Time (related document:4 Motion for Relief from Stay. Fee Amount $ 150. filed by Creditor Qwest Communications Corporation) Filed by Boris I. Mankovetskiy on behalf of Qwest Communications Corporation. (Attachments: # 1 Proposed Order proposed Order Shortening Time of Notice of Hearing on Emergency Motion) (Mankovetskiy, Boris) (Entered: 07/06/2004) 07/06/2004 6 Notice of Appearance and Request for Service of Notice filed by James S. Carr on behalf of Access Integrated Technologies, Inc.. (Carr, James) (Entered: 07/06/2004) 07/06/2004 Order Granting Application to Shorten Time (related document:4 Motion for Relief from Stay . Fee Amount $ 150. filed by Creditor Qwest Communications Corporation). The following parties were served: debtor, UST, movant. Signed on 7/6/2004. Hearing scheduled for 7/8/2004 at 10:00 AM at RG - Courtroom 3E, Newark. (mg, ) (Entered: 07/06/2004) About a month ago, Norvergence became very clever and manipulated the Google and other search engines by putting their web sites and sub websites before the others, which include complaints. They even changed one to Norvergencefraud.com , which is really their own, The people who were communicating on the web site got pushed way back, including stories Leasing News was writing---so at first, unless you hunt, you won't find the meat. The New Jersey Star-Leger says $15 million is owed to Qwest and The great majority of the Norvergence “systems” were leased by third parties that Norvergence organized. Robert Fine was in charge of this. Leasing News could not reach him. Perhaps he is no longer employed Newspaper reporters are contacting us trying to determine what the In reality, we all need to see their actual sales, which the bankruptcy papers may list, and it also depends if the house of cards fall apart. My guess is around $25 million. It could go as high as $75 to $100 million over a five year period, but a good guess is $25 million will If the lessee stop paying the lease payments, I doubt that there is any "recourse" to Norvergence, although there could be what is known in the trade is "representation and warrants" by Norvergence that could be utilized to bring responsibility for lack of the lease payments to Norvergence. Then it would be $50 million over five years, and with all the other factors, yes, this could be $100 million. If there is a class action suit, the attorney fees could be anywhere from $3 to $5 million, likely will not be known for about a year...and it is a good notion that this will move from a Chapter 11 to a Chapter 7 and that is why I say about a year to find out the actual numbers. The Telecom Agent's Association EDITORIAL OPINION is as follows: “When the banks take a good look at what they have inherited, they will quickly determine that they are in their full rights to require that the Matrix lease holders pay in full for a box that is providing little or no value. The banks will also determine that all the money the Matrix lease holders are required by their lease to pay leave no money left over to actually pay for network usage. “TAA's prediction is that the chapter 11 will move to chapter 7 when it becomes obvious to the banks that no tangible assets exist, no workable business model exists, no "goodwill" for the company exists, no extra money exists to purchase the needed network usage required to provide service through the Matrix boxes and that the Matrix box lease holders will be forced by the banks to honor their leases. It is further predicted by TAA that the current network service providers (Qwest & the cell phone companies) for Norvergence will discontinue providing service as soon as the courts allow. “PLEASE NOTE THAT TAA IS NOT PRIVY TO INSIDE INFORMATION REGARDING NORVERGENCE AND IS NOT CONNECTED TO NORVERGENCE IN ANY WAY. THE ABOVE EDITORIAL OPINION AND PREDICTION MAY BE WRONG. PLEASE DO NOT BASE YOUR DECISIONS ON INFORMATION PROVIDED SOLELY BY TAA. PLEASE CONSULT NORVERGENCE, THE APPLICABLE BANKRUPTCY COURTS AND YOUR OWN ATTORNEY BEFORE MAKING ANY DECISIONS REGARDING YOUR PHONE SERVICE. TAA WILL UPDATE THE ABOVE OPINION AND PREDICTION AS EVENTS WARRANT. “ To learn more, you must register, which is free, by going to: http://www.telecomagent.org/Member.htm Here is the New Jersey Star-Ledger latest article: NorVergence in debt to tune of $15 million BY HENRY C. JACKSON New Jersey Star-Ledger Staff NorVergence, a once-hot telecommunications provider, was forced into bankruptcy court by three creditors who say the Newark company was not paying its bills. The involuntary petition for Chapter 11 bankruptcy protection, filed late last week but posted online over the weekend, portrayed a company sinking under millions of dollars of debt. The move leaves approximately 10,000 customers, mostly small and mid-sized businesses who use NorVergence for telephone and Internet service, in limbo. And the news was no better for many of NorVergence's employees. They were sent home for good last week. When closely held NorVergence came to town in 2001, the company was touted as an important source of new jobs in Newark's troubled downtown area. NorVergence, at its most basic, bought whole telecommunications service and resold it. But layoffs and allegations of bounced checks and poor service have dogged the company. NorVergence executives have declined to comment on the company's status. But the filing confirmed speculation that circulated for weeks about the company's precarious financial status. The three companies named as creditors -- Popular Leasing USA, of Ballwin, Mo.; OFC Capital, a division of ALFA Financial, of Roswell, Ga.; and Partners Equity Capital, of Horsham, Pa. -- have accumulated a debt of at least $11,625, the threshold needed to file an involuntary petition for bankruptcy. But court documents show NorVergence owes $15 million to another creditor, Denver-based telephone giant Qwest Communications. A hearing on that claim is scheduled for tomorrow in Newark. "We have a wholesale relationship with NorVergence in which we provide them with services, and we will continue to provide the company service until the bankruptcy court allows us to discontinue service," said Claire Mylott, a spokeswoman for Qwest. "We believe that NorVergence has an obligation to pay all of its outstanding obligations, including those to Qwest." Under an involuntary bankruptcy petition, the targeted company has 30 days to respond. If the company disputes the allegations by the creditors, a trial will be scheduled. NorVergence's problems apparently came to a head Thursday when, according to several former employees, company Chief Executive Peter Salzano announced the company had filed for bankruptcy. When Salzano delivered the news to NorVergence's employees, he told many it would be their last day of work at the company. The company declined to say how many workers were let go. Salzano was distressed as he moved through NorVergence's offices on 550 Broad St. announcing the news, said Ernest Slyman, an employee of the company since September. As he made the announcement, people grew upset, Slyman said, and "there were a lot of demands, lots of shouting." A man in a NorVergence polo shirt blocked the door to the company's third-floor office on Thursday afternoon, refusing to comment. Former employees poured out of the office, though some carried boxes filled with sundry items from the office such as staplers and CD racks. These former employees said they'd been told the company had filed for some form of bankruptcy. After working at NorVergence for three months, Quadriyyah Griffin, 25, was fired Thursday. She had not been paid in two weeks. "In a way, we saw it coming," she said. "But you didn't want to believe it." Dan Baldwin also saw signs that NorVergence was floundering. The founder of telecomagent.org, a membership Web site that provides industry news for telecom users, distributors and providers, Baldwin said he long questioned NorVergence's business plan. Under that plan, companies signed long-term leases for phone and Internet services at locked-in rates, much like a fixed-rate mortgage on a house. But this arrangement would have required a "miracle" to be profitable, Baldwin said. NorVergence was betting that once a company was locked in at a certain price, the going wholesale rate for phone and Internet service would drop, giving NorVergence a profit, he said. That did not happen, he said. Still, creditors who provided NorVergence with services were not in a position turn down new business, because the telecommunications industry has been battered in recent years, he said. "When the Golden Goose is knocking out golden eggs, and the ancillary venders and the leasing companies are having a hard time making money, the companies are going to put out their hands and turn a blind eye to the fact that the golden eggs are somewhat stinky," Baldwin said. Henry C. Jackson can be reached at hjackson@starledger.com or (973) 392-5720. |
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