FairPoint Communications 2011 Annual Report Download - page 77

Table of Contents
immediately after the reorganization, was allocated to the fair value of assets in conformity with guidance under the applicable accounting rules for business
combinations, using the purchase method of accounting. The amount remaining after allocation of the reorganization value to the fair value of identified
tangible and intangible assets was reflected as goodwill, which was subject to periodic evaluation for impairment and was determined to be entirely impaired at
September 30, 2011. See note 3(n) for further details of the goodwill impairment. In addition to fresh start accounting, the Company’s post-emergence
consolidated financial statements reflect all effects of the transactions contemplated by the Plan. Therefore, the Company’s post-emergence consolidated
statements of financial position and consolidated statements of operations are not comparable in many respects to the Company’s consolidated statements of
financial position and consolidated statements of operations for periods prior to the adoption of fresh start accounting and prior to accounting for the effects of
the reorganization. See note 2 for a presentation of the impact of emergence from reorganization and fresh start accounting on the Company’s financial position.
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On the Petition Date, the Debtors filed the Chapter 11 Cases.
On January 13, 2011, the Bankruptcy Court entered into an Order Confirming Debtors’ Third Amended Joint Plan of Reorganization Under Chapter 11
of the Bankruptcy Code dated as of December 29, 2010 (the “Confirmation Order”), which confirmed the Plan.
On the Effective Date, the Company substantially consummated its reorganization through a series of transactions contemplated by the Plan, and the
Plan became effective pursuant to its terms.
On June 30, 2011, the Bankruptcy Court entered a final decree closing certain of the Company’s bankruptcy cases due to the closed cases being fully
administered. Of the 80 original bankruptcy cases, only five remain open. These cases are FairPoint Communications, Inc. (Case No. 09-16335), Northern
New England Telephone Operations LLC (Case No. 09-16365), Telephone Operating Company of Vermont LLC (Case No. 09-16410), MJD Services Corp.
(Case No. 09-16366) and Enhanced Communications of Northern New England Inc. (Case No. 09-16349).
Plan of Reorganization
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The Plan provided for the cancellation and extinguishment on the Effective Date of all of the Company’s equity interests outstanding on or prior to the
Effective Date, including but not limited to all outstanding shares of the Company’s common stock, par value $0.01 per share (the “Old Common Stock”),
options and contractual or other rights to acquire any equity interests.
The Plan provided for:
• (i) The lenders under the Credit Agreement, dated as of March 31, 2008, by and among FairPoint Communications, Spinco, Bank of America,
N.A. as syndication agent, Morgan Stanley Senior Funding, Inc. and Deutsche Bank Securities Inc., as co-documentation agents, and Lehman
Commercial Paper Inc., as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified from time to time,
the “Pre-Petition Credit Facility”), (ii) the administrative agent under the Pre-Petition Credit Facility (other than certain indemnity and
reimbursement rights of the administrative agent which survived) and (iii) holders of other claims against the Company arising under the Pre-
Petition Credit Facility or ancillary agreements (including swap agreements) (collectively, the “Pre-Petition Credit Facility Claims”) to receive the
following in full and complete satisfaction of such Pre-Petition Credit Facility Claims: (i) a pro rata share of a $1,000.0 million term loan facility
(the “ Term Loan”), (ii) a pro rata share of certain cash payments, (iii) a pro rata share of 23,620,718 shares of our new common stock, par
value $0.01 per share (the “New Common Stock” or “Common Stock”) and (iv) a pro rata share of a 55% interest in the FairPoint Litigation
Trust (the “Litigation Trust”);
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