NorthPoint files for Chapter 11

NorthPoint Communications Tuesday announced it has filed for Chapter 11 bankruptcy protection, less than two months after Verizon terminated its merger agreement with the San Francisco DSL wholesaler. Also Tuesday, DSL wholesaler Rhythms NetConnections of Englewood, Colo., announced plans to focus on fewer markets and lay off about 23% of its workforce.

NorthPoint CEO Elizabeth Fetter says her company will continue to provide DSL service to its customers. She explained that the Chapter 11 filing will give NorthPoint time and financial resources to allow the company to continue operating until it finds a strategic partner.

Fetter placed the blame for her company's financial problems on Verizon. Approximately six weeks ago, Verizon canceled a previously announced merger agreement with NorthPoint, citing NorthPoint's worsening financial position and business operations. NorthPoint subsequently sued Verizon, saying that Verizon had no basis to cancel the merger.

Meanwhile, Rhythms became the last of the three large national DSL wholesalers to announce cutbacks; Covad and NorthPoint made major workforce cuts late last year.

Rhythms now plans to concentrate its efforts on its 40 largest markets, which encompass about 40% of the homes and 45% of the businesses in the U.S. By refocusing its efforts and scaling back its workforce, Rhythms expects to cut its 2001 expenses by about $80 million.

Contact Senior Writer Michael Martin

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