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Oregon Telecom Cites Virus in Bid to Restructure Merger Payments

April 6, 2020, 7:10 PM

WiLine Networks Inc. asked an Oregon federal court to restructure the post-merger payments it owes the former Freewire Broadband LLC, saying the cash squeeze caused by the Covid-19 pandemic will drive it out of business if it makes them on time.

“The contracts at issue in this case between WiLine and Freewire were entered into long before there was an inkling of a coronavirus worldwide crisis,” the lawsuit says.

WiLine owes Freewire and its principal owner, Erik Krieger, two additional $750,000 payments stemming from the $3.5 million sale of Freewire’s telecom assets in the Portland, Ore., area in 2018, according to the complaint. Freewire is now known as Inconnu LLC.

The first of those payments is due by April 10, and the second by Aug. 1, the suit says. But WiLine allegedly won’t be able to make both the payments and its own payroll because it’s being squeezed from both sides, thanks to government orders designating it “critical infrastructure.”

Those orders from the Federal Communications Commission and the Department of Homeland Security bar WiLine from cutting off services or charging late fees to customers that don’t pay their bills, the suit says.

That allegedly describes more and more customers, as the coronavirus wreaks havoc on the economy and states order businesses temporarily closed. At the same time, quarantines and social distancing protocols have increased the strain on telecoms like WiLine, according to the complaint.

“Network traffic, including voice calls, is multiplying as companies shift to telework, health care providers are currently ramping up telemedicine offerings, and schools are implementing distance learning,” the suit says.

Those circumstances have made it impossible, as a matter of contract law, for WiLine to meet its payment obligations, it claims.

WiLine reached out to Inconnu and Krieger about restructuring the payments, but they were “ambiguous about accepting or rejecting that offer,” according to the complaint. It’s time for the court to step in, the suit says.

Cause of Action: Declaratory Judgment Act.

Relief: A court order crafting a payment plan “that will cover payment of all arrearages to Freewire accrued as a result of the coronavirus crisis.”

Response: Contact information for Freewire wasn’t available Monday.

Attorneys: WiLine is represented by Neely & Callahan and Larkins Vacura Kayser LLP.

The case is WiLine Networks Inc. v. Inconnu LLC, D. Or., No. 20-cv-556, complaint filed 4/3/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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