Less than a week after it emerged from bankruptcy protection, 360networks Corp. surprised the telecommunications sector by buying GT Group Telecom Inc. Creditors of the CLEC, which had been operating under the Companies’ Creditors Arrangement Act, may be out in the cold, however. Details were sketchy at press time, but a news release announcing the move stated, "This transaction will not involve any significant recovery for the trade creditors of GT Group Telecom Services Corp. and GT Group Telecom Services (USA) Corp. and will involve no recovery for the unsecured lenders or shareholders of GT Group Telecom Inc. Outstanding claims of Group Telecom’s unsecured creditors will be dealt with in a CCAA plan of arrangement associated with the implementation of the transaction." No purchase price was revealed, but it will be included in Group Telecom’s reorganization plan. Unconfirmed reports placed the price at around $200 million. The CLEC had applied for CCAA protection last June (NL, July 3/02). Since then, Group Telecom has been granted extensions of its CCAA protection, most recently until December 11. 360networks itself only emerged from restructuring on November 12, slightly later than its initial prediction of September. Plans for the reorganization were hampered when Telus Corp. temporarily delayed approval of a new proposal (NL, Sept. 10/02). 360networks now has US$100 million in cash and US$215 million of bank debt. This is reduced from the pre-filing debt level of US$2.7 billion. It filed for protection in July of last year. One of the key players in the salvation of both companies is Wilbur Ross Jr., the chair of WL Ross & Co. LLC. The private equity firm bought debt securities of 360networks representing 10 per cent of new equity and 13 per cent of new bank debt. The company is also providing a backstop for the cash the fibre giant needs to buy Group Telecom. The assets of the two telecom firms should complement one another. Group Telecom offers voice and data service across 17 metro fibre networks in nine provinces. 360networks has an intercity network that connects 48 major cities in North America. The two companies had worked together in the past. Two years ago, 360networks signed a deal with Group Telecom to provide fibre and capacity to the CLEC (NL, June 5/00). The rescue of 360networks makes one analyst look prescient. Peter Chapman, editor of the Bankruptcy Creditors Services Inc. of Trenton NJ, told Network Letter last year the company was still viable (NL, July 17/01). "They’re going to finish building out the North American network, get subscribers on the thing, increase the capacity, etc. It might work," he said at the time. The 360networks-Group Telecom arrangement still needs approval from the courts and from regulators. The companies have set a target of February 15, 2003 to close the deal.