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Bankrupt Omnicity acquired for $876,000 by four investors

J.K. Wall
December 5, 2012
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A group of four investors has acquired Omnicity Inc., a bankrupt provider of rural broadband services, by agreeing to pay off an estimated $876,000 in company  bills.

The deal, approved last month by the U.S. Bankruptcy Court in Indianapolis, gives the investors, whose company is called Broadband Networks Inc., Omnicity’s 38-person operation, based in Rushville, as well as its 270 Internet towers around Indiana and Ohio.

Broadband’s bid, put forth in the spring, was the only one for Omnicity until early November, when a group of nine competing broadband companies offered $1.6 million for Omnicity.

But U.S. Bankruptcy Judge James Coachys rejected that bid as too late, allowing Broadband’s bid to go forward.

Dr. David Bash, one of the four new owners of Omnicity, said they do not plan to continue Omnicity’s rapid acquisitions of other companies, but instead hope to improve the quality and reliability of the company’s service.

“We hope to have a better management of capital, and hopefully plow it back into the business,” Bash said during a conference call with reporters on Wednesday morning. “Strategically, we’d be more interested in just growing our [existing] business as opposed to acquiring other providers.”

Omnicity, founded in Indianapolis in 2003, grew rapidly via acquisition, and built up as many as 12,000 subscribers in Indiana and Ohio. But the company’s financial troubles and bankruptcy have led to its subscriber total dwindling to just 5,000.

Broadband will keep Omnicity executives Jeff Garman and David Bradford on board, but in new roles, Bash said.

“They’re not necessarily the reason for the bankruptcy,” Bash said. “We think this is a talented crew.”

The new CEO of Omnicity is Jeff King, a former executive vice president for Time Warner Cable and former president of Road Runner High Speed On-Line.

King and Bash joined with two other cable industry veterans—Buz Nesbit and Mike Sellers—to acquire Omnicity.

Their bid to acquire the company also includes a commitment to pay up to 3 percent of the claims by unsecured creditors of Omnicity if the company starts generating profits again. As of September, Omnicity was pulling in revenue at an annual rate of $3 million but losing about $80,000 a year.

Omnicity’s unsecured creditors are owed somewhere between $3 million and $3.9 million, according to an analysis filed with the U.S. Bankruptcy Court. So the maximum Broadband will have to pay is $116,000.

Bash said all secured and unsecured claims would be paid as agreed. But Jeff Hokanson, an attorney at Frost Brown Todd who represents the unsecured creditors, said receiving 3 cents on the dollar means the unsecured creditors essentially receive nothing.

“No one is being paid enough to even pay their attorney to open a piece of mail,” Hokanson said.

Omnicity filed for Chapter 11 bankruptcy protection in September 2011 after getting hit with five lawsuits from acquired companies that claimed they had not been paid.
 

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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