Log On America Plans Chapter 11 Filing

Log On America, of Providence, R.I., files for bankruptcy and cancels an agreement to sell customers to Earthlink, alleging that Earthlink never paid up.

by boston.internet.com Staff [July 11, 2002]

Log On America, a debt-saddled Providence, R.I., Internet service provider, will file for Chapter 11 bankruptcy protection.

"With support for the plan, we expect the reorganization process to go smoothly and our operations to be unaffected," David Paolo, Log On America's chairman and CEO, said in a statement.

Other than to say the filing will cut $10 million in debt, Log On America gave few details of its planned restructuring. The petition will be filed in U.S. Bankruptcy Court in Delaware.

In addition, the company has taken back about 17,000 dial-up customers it had assigned to Earthlink. Log On America alleges Earthlink failed to pay certain fees under a subscriber acquisition agreement. The users represent about $5.5 million in annual revenues, the company said.

The deal was originally signed in February and at the time represented a shift in Log On America's focus to business customers.

Also under the deal, EarthLink contracted LOA to provide ongoing wholesale communications services to support the subscribers.

In addition to Internet access Log On America provides the following services: telephone and voice mail, Web site creation and hosting, integrated voice and data services, server collocation, niche ASP applications, managed service level agreements, and network consultancy, architecture and implementation (LAN, WAN, VPN).

Besides the economic slowdown, Log On America was hurt by a series of shareholder lawsuits (which it later settled). Its stock fell off the Nasdaq onto the over-the-counter market.

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