GST Telecommunications Inc. These companies have become infamous as the only two CLECs to file bankruptcy since the advent of the competitive telecommunications industry.
Bankruptcy is never pleasant.
Just ask the shareholders and employees of these companies. In this issue, Ken Branson documents the problems faced by GST, which resulted in the company's filing for Chapter 11 protection and seeking to sell all of its assets at fire sale prices. In fact, the CLECs are faring much better than the airlines, which saw several major companies fail after competition was introduced in their industry. But even though these bankruptcies don't mean the rest of the CLEC industry is at risk, it could cause investors and Wall Street to become more cautious when doling out their dollars. CLECs will now be valued more on real profitability and less on potential market opportunity.