Under the bankruptcy plan, the company will reduce its debt load by two-thirds -- from $2.7 billion to about $1 billion. "I'm confident that FairPoint will emerge as stronger, more viable company," said FairPoint CEO David Hauser in a telenewsconference this morning. Hauser says the company was challenged by switching over to its own computer systems nine months ago, which led to problems with billing and filling orders on time. He also blames the recession.

Hauser promises customers will not see any service changes as the company works through bankruptcy - a process which he says could take "a number of months."

"First, service will not be interrupted; second, payment and billing schedules will not change; third, we will continue to expand our services; and fourth, we are, and will continue to be, committed to our customers," Hauser says.

"It is our belief that Maine consumers will continue to have the phone network system work, dial tone will not be lost, or Internet," says Sharon Reishus, who chairs the Maine Public Utilities Commission.

Reishus says that debt restructuring should put FairPoint in a better position to fulfill the promises it made to regulators when it bought Verizon's landlines. "That would include FairPoint's committment to substantially upgrade the infrastructure and expand broadband."

To ensure the state's views are heard during the bankruptcy proceedings, the PUC has retained legal counsel. So has the state's Office of the Public Advocate, which represents Maine consumers. Dick Davies, the Public Advocate, says he is worried about who will own FairPoint in the long run, and how that will affect consumers.

The bankruptcy plan, he points out, puts 98 to 100 percent of the company in the hands of lenders. "What it doesn't tell us is whether they intend to be long-term owners of the company and run it as a utility or are they looking to get it back on its feet and sell it off fairly soon, which will mean one more change in ownership, which means proceeedings before the Maine PUC."

FairPoint employees greeted the bankruptcy news with mixed feelings. Peter McLaughlin, who chairs a council representing about 2,500 telephone company workers from the three Northern new England states, says that on the one hand, a strong company bodes well for workers.

But McLaughlin, who works for the International Brotherhood of Electrical Workers in Augusta, says employees are worried that the company will take advantage of its Chapter 11 status to push for concessions from the union. Layoffs, McLaughlin says, would only hurt the company as it tries to regain its footing.

"It would certainly be a detriment to service and our ability to provide service because it's all hands on deck here and due to systems that they currently have and are not functioning to full capacity," he says.

FairPoint next has to get its bankruptcy plan approved by U.S. Bankruptcy Court in the southern district of New York. Though FairPoint is based in North Carolina and incorporated in Delaware, Hauser says the company chose to file in New York, because it is the "financial hub of the country" and that judges there deal with bankruptcy filings as a matter of routine.