Exodus seeks Chapter 11 bankruptcy protection

In an announcement today, Web-hosting and managed network service provider Exodus Communications Inc. confirmed earlier speculation that it would seek protection under Chapter 11 bankruptcy laws while it reorganizes.

Officials at the in Santa Clara, Calif.-based Exodus said the move was voluntary and noted that the company has received $200 million in debtor-in-possession financing from GE Capital Corp., which will allow it to continue to operate.

"This restructuring action ensures we have the wherewithal to do that, and our daily operations continue uninterrupted as before," said Exodus Chairman and CEO L. William Krause.

Krause, a former chairman of 3Com Corp., replaced Ellen Hancock after she departed Exodus earlier this month (see story).

Yesterday, Exodus issued a statement that it had ceased trading on the Nasdaq stock exchange because of rumors that it would file for Chapter 11. More information about the company's restructuring plans is available online at a special Exodus Web site.

Mark Fox, CEO of Novator Systems Ltd. in Toronto, who co-locates the servers he manages for clients such as FTD.com at Exodus data centers, said he has been concerned about Exodus' financial problems for some time. But, he said, Exodus has continued to be an excellent provider.

"It's clear that Exodus has expanded too quickly," Fox said. "I believe by filing for Chapter 11, they can shed nonperforming assets and perhaps put themselves in a position to be attractive for purchase by a financially stronger company."

Fox said Novator has been setting up servers in-house during the past few months to provide backup should Exodus run into operational problems. Fox stressed, however, that co-location -- putting servers in service provider data centers instead of keeping them in-house -- is still his company's preferred way of doing business.

Related stories:

Copyright © 2001 IDG Communications, Inc.

Bing’s AI chatbot came to work for me. I had to fire it.
Shop Tech Products at Amazon