Business Internet services company KPNQwest NV filed for protection from creditors on Thursday as it continues to work with banks and advisors to find funding alternatives, it said in a statement.
The protection, under Dutch moratorium law, is similar to Chapter 11 bankruptcy protection in the U.S., with the main difference being that it only protects unsecured creditors and is granted for a limited time, KPNQwest said. The protection is intended to give a company breathing space to resolve temporary financial problems by suspending the need to make payments.
Earlier today, KPNQwest's supervisory board, made up of two representatives of Qwest Communications International Inc., two independent directors and one representative of Koninklijke KPN NV, resigned with immediate effect.
KPNQwest, in Hoofddorp, Netherlands, is a pan-European provider of data communication and hosting services. The company owns and operates a fiber optic data network that connects 60 European cities. Customers include Hewlett-Packard Co., Foot Locker Inc. and Dutch airline Koninklijke Luchtvaart Maatschappij NV (KLM).
Customers are being informed about KPNQwest's situation, with the largest customers being updated by phone, spokesman Piers Schreiber said earlier Thursday. He said customers had been supportive of KPNQwest and that no customer had switched away.
Last week, KPNQwest issued a statement containing a strong warning about its precarious financial position, which led research group Gartner Inc. to advise the company's customers to look around for an alternative supplier. (David Legard, IDG News Service correspondent in Singapore, contributed to this report.)