As I write this Fairpoint has just filed for Chapter 11 protection. Bankruptcy is not pretty and the process of bankruptcy only works if the Plan of Reorganization addresses the company’s underlying problems.

I am fearful that the Fairpoint bankruptcy will not result in any positive and long term changes. It is good that Fairpoint will continue to rollout the broadband network but it will do so under a substantively changed plan. What does this mean for customers? More than likely not good news. Basic service will continue but most of the Fairpoint territories will see scaled back network upgrades.

What creditors need to demand is true change. Before Fairpoint filed, there were issues regarding the company’s back office systems, as noted in various articles. The back office systems issue involves CapGemini. At this time, industry views are that the cutover failed – that much appears pretty obvious. Folks will blame Cap Gemini. However, I blame management as well. CapGemini was paid to do a job. Fairpoint management was supposed to have been closely monitoring the work. The back office system issues have been going on for months.

My best guess, again I say guess, is that the back office systems issues were much deeper than published reports. CapGemini is not completely to blame.

The Fairpoint PoR needs to address management change as well. The creditors of Fairpoint will now control the company. My advice to Fairpoint creditors: “It’s your company and you control every aspect of it. Consideration must be given to evaluating the current management team of Fairpoint.”

The best long term solution for the current creditors is to sell off territories to experienced telecom professionals and their financial backers.