NorVergence service could end today
Thursday, July 15, 2004

BY HENRY C. JACKSON

Star-Ledger Staff

Customers of NorVergence could be without telephone and Internet services as early as 5 p.m. today after the company filed for Chapter 7 bankruptcy, which entails liquidation of the company.

The Newark-based company, which resold telecommunications services, had been given until yesterday to show it had a plan in place to address mounting debts, including more than $15 million owed to Denver-based Qwest. NorVergence couldn't offer a plan for payment and instead appealed to Judge Rosemary Gambardella of U.S. Bankruptcy Court in Newark for more time to restructure.

The judge told the company she wouldn't accept another delay without a plan in place. After a brief recess, a lawyer representing NorVergence told the judge the company wouldn't be able to offer a plan. As a result, NorVergence's attorney, Bruce Buechler, asked to move the company from involuntary Chapter 11 bankruptcy -- which the company had been forced into by three creditors -- to a voluntary Chapter 7 bankruptcy.

Explaining why the company was filing, Buechler said the company was unable to pay much of its debt, including thousands of dollars in back salary to unpaid employees who have since been dismissed by the company.

The filing will leave NorVergence's customers -- about 10,000 clients throughout the country, most of which are small businesses -- facing service interruptions unless they change their service provider. It also means it is unlikely any of the money owed to the company's former employees will be paid.

As a part of Gambardella's ruling, companies that provided service to NorVergence's customers can't cut off service until 24 hours after an acting U.S. Trustee was appointed to oversee the Chapter 7 liquidation. A trustee was expected to be appointed by the end of the day yesterday.

A lawyer representing some of NorVergence's customers, Kenneth Aaron, said the ruling could be harmful for customers who would have little time to find another service provider.

"It's very bad," he said. "Their systems could go dark in 24 hours."

Buechler said NorVergence's remaining employees would work until the end of the day, but no one would return to the office. William Bennett, owner of Bennett's Signs and Lighting in Middlesex, a NorVergence customer, said he was alarmed no one at NorVergence would be available to answer questions.

"Now I've got serious situations, with nobody to answer my questions," he said. "It leaves me serious questions about what happens to my cell phones, my office phones, everything."

Representatives of NorVergence's creditors said they would make good-faith efforts to not interrupt service. But Bennett said he couldn't believe more wasn't being done for NorVergence's former customers.

Peter Salzano, NorVergence's chief executive, was present in court yesterday, but had no comment. He showed little reaction throughout the proceedings, even as lawyers and judges effectively closed the company he had run since 2001. Henry C. Jackson can be reached at hjackson@starledger.com or (973) 392-5720.