VarTec Telecom IR committee's sale reconsideration request denied

By Caroline Salls

Pittsburgh, Aug. 16 - VarTec Telecom Inc.'s official committee of excel independent representatives' request to reconsider approval of the $82.1 million sale of the company's remaining assets to Comtel Investments LLC was denied by the U.S. Bankruptcy Court for the Northern District of Texas, according to a Tuesday filing.

According to the committee's motion, Rural Telephone Finance Cooperative, which will receive the net proceeds of the sale to pay pre-bankruptcy loans, should be required to meet its burden of proof as to the validity, priority and extent of its loans to be entitled to apply the proceeds to the loans as adequate protection payments.

The committee said that the court, "at the very least," should add language to its order preserving the rights of interested parties, including the IR committee and unsecured creditors committee, to challenge the RTFC's entitlement to apply the proceeds to the loans as adequate protection payments.

According to the court's denial, at the sale hearing, counsel for the RTFC stated on the record that all payments made to the RTFC from the sale proceeds are subject to disgorgement.

"The court finds that this should alleviate the concerns of counsel for the IR committee," the filing said.

VarTec, a Dallas-based telecommunications provider, filed for bankruptcy on Nov. 1, 2004. Its Chapter 11 case number is 04-81694.

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