Succumbing under the economic crunch, FairPoint Communications, a rural telecom services provider, has filed for Chapter 11 bankruptcy in the U. S. Bankruptcy Court, Southern District of New York, post which the company plans to cut its debt by $1.7 Billion. Ownership will be transferred completely to lenders. Through the plan, the company is hoping to convert nearly $1.1 billion of its debts into equity

According to a statement issued by the North Carolina based firm, the plan of possible restructuring post filing for bankruptcy has complete support of the lenders who currently hold more than
50% of outstanding debt.

FairPoint, which was founded in 1991 and currently has a workforce of nearly 4,100, has been incurring heavy losses as a result of the economic downturn and strict cost cuts from everywhere. In its second quarter report this year, the company reported a loss of $17.8 million. Mounting debts and repeated losses have prompted the company to take this difficult step.

"The day-to-day operations of our business will not be impacted by today's actions", Chief Executive David assured.