What do Stargate customers need to know about the Chapter 11 filing?
First and foremost, customers can be assured that this action will not affect our ability to continue fulfilling our service obligation. The business is generating cash and we have cash on the balance sheet, so we have no immediate concerns regarding our ability to meet our operating expense or payroll obligations. Our commercial customers will be contacted directly by either their Account Manager or their Client Care representatives to review and alleviate any concerns they may have. All of our Small Business and Residential customers will receive this same assurance if they have any questions or express any concerns. This is an Administrative and Finance related action, which will not impact our ability to continue providing superior customer service or complete our consulting engagements.

• Our Call Center, NOC and Client Care teams will continue to operate as normal.
• Our Consultants will continue to work on customer projects.
• Our Business Development Staff will continue to seek out new engagements.

No matter what scenarios play out, in all cases, it is the company´s intention to provide service continuity for our customers and with this recent announcement, we are more confident than ever before that service will continue uninterrupted.

More specifically, many customers have written to ask what will happen to their email, and what, if any, changes will be required to their configuration of service delivery.  While a definitive answer to these transition questions won´t be available until the court approves these likely scenarios in the coming months, the company is making preparations that will minimize inconvenience and prevent interruption.

I thought going to bankruptcy court meant going out of business? What is the difference between Chapter 7 and Chapter 11 ?
There are generally two types of bankruptcy proceedings, Chapter 7 and Chapter 11.  While both are complex legal proceedings, Chapter 7 is a form of bankruptcy that asks for the court's assistance in "liquidating a company", by selling off all of its assets and splitting the value of the return among the remaining creditors. Effectively, going out of business.

Chapter 11, which Stargate is pursuing, allows a company to continue operating in the ordinary course of business and to maximize recovery for the company's stakeholders. The filing will enable the company to continue to conduct business as usual while it develops a reorganization plan. This course of action will protect the company from credit agreements, facilitate the restructuring of our capital and allow us to pursue our long-term business plan.

How does a company get out of Chapter 11?
The company presents its plan to the courts, and once approved, the courts will oversee the consummation of payments to its creditors and the related transactions that will allow it emerge and go forward.

Does Chapter 11 change current customer contracts?
This proceeding will not affect Stargate's ability to fulfill its contractual obligations and therefore, we will not default on any of our obligations under these contracts. As such, we fully expect customers to honor their contracts.

How will Stargate customers react?
Since we provide an essential service, we expect many customers will have some concerns. However, since we've earned business based largely on our service acumen, we anticipate a great deal of support and understanding from our loyal customer base. We will reach out to assure our customers that they can be confident in the continuity of high-level service.

Any customers who express a high degree of concern, or who have additional questions, should be directed to reorg@stargate.net, and the appropriate member of the Management team will respond personally within 48 hours. 

Should business customers feel confident signing new contracts with Stargate?
Yes. Stargate operates a mature network and facility infrastructure. The credit challenge that precipitated this filing was related primarily to its relationships with its Senior Bank Lenders. Stargate remains in good standing with its upstream telecommunication carriers and its facility leaseholders, so new customers can be confident that the promise of their proposed contracts can be fulfilled.

I just signed a new agreement with Stargate, why wasn't I informed about this?
The Senior Management Group and the Board of Directors of Stargate, just recently began negotiations with the Lenders to either restructure or buy out the company's credit facility. We were confident up until the very last minute, that a settlement outside of a court proceeding could be reached. Unfortunately, the Lenders did not agree with our assessment and we were forced to take another course of action; a court facilitated restructuring of the company and its capital structure. The Chapter 11 process was obviously not our first choice for solving this issue, but as soon as it became apparent that we would be forced to pursue that option, we began notifying our Management team, employees, customers and stakeholders.

What happens to vendors who had an open invoice with Stargate before the Chapter 11 petition was filed?
Bankruptcy law prohibits the payment of any pre-filing, open invoices, until the court is able to evaluate the full plan for reorganization. Upon plan approval, any pre-filing claims are paid at the conclusion of the Chapter 11 case in accordance with the plan of re-organization, which will be voted upon by the various creditor groups and subsequently approved by the court.

Should vendors feel comfortable that they will be paid for services going forward?
Stargate's going forward (post petition) vendor relationships should not affected by this filing, in fact, the Chapter 11 process requires that we pay for goods and services in the normal course of business.