US-based NII Holdings Inc, the parent company of Nextel-branded operators in a number of Latin America countries, has filed for US bankruptcy protection, Reuters reports. The decision to file a voluntary petition for Chapter 11 – which protects a company from creditors while it reorganises its assets for a limited period – in a New York court is said to have been prompted by the company’s ongoing struggle with debt, fierce competition in Brazil and Mexico, and a dispute with a US hedge fund. It has, however, been suggested that the decision to file could allow NII Holdings to restructure its debt with creditors by turning them into shareholders, while also allowing it to implement a more sustainable business model with a focus on its core markets of Brazil and Mexico.
A filing for bankruptcy is not wholly unexpected; as reported by CommsUpdate last month, with NII Holdings having struck a deal to sell its Chilean subsidiary to a joint venture of US, Argentinian and UK companies, the group announced separately that it had not been able to reach a deal with its bondholders regarding debt restructuring, a situation which it said could prompt it to file for Chapter 11 bankruptcy. Reporting net losses of USD623.3 million for Q2 2014, NII chief executive Steve Shindler noted at the time: ‘Despite the actions we’ve taken to improve our operational performance, we have fallen short in our efforts, leaving the company with a liquidity position that is not sufficient to support the business.’