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Court Order Could Force Burlington Telecom to Default on Lease 

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It was another day, another court appearance for Burlington Telecom as the utility struggles to stay alive while responding to regulatory, legal and political inquiries.

Today BT agreed explicitly to a court order barring it from making a key $386,000 interest payment to CitiLeasing on Feb. 17 unless it receives explicit approval from the Vermont Public Service Board.

The court order will be moot if the PSB rules in BT's favor, allowing the utility to use some of what is known as pooled cash.

If the city fails to make the CitiLeasing payment, it will be in technical default of its $32 million lease. There is a $1 million reserve clause in the lease that could be accessed by CitiLeasing.

If the court order stands, BT will also be unable to access pooled cash and "other city monies" going forward to pay any other bills it owes unless the funds are repaid in 60 days. To enforce that aspect of the order, BT agreed to give several key financial reports to the plaintiffs every 30 days, including reports of accounts payable and receivables, the daily statements of city accounts, all money due to and from BT, all money owed by BT to the city, and financial projections.

"This order does nothing but provide further evidence of the commitment the city has made to comply with Condition 60," said the city's attorney, Pietro Lynn, who has been hired as outside counsel.

Robert Hemley, arguing for the plaintiffs, said this order was the only way to ensure the city would not pay its bills with pooled cash, putting taxpayers at further risk. Though, he noted several times, allowing BT to expend any further money without repaying $17 million continues to put taxpayers at risk.

BT argued before the PSB on Thursday that it wants the option of dipping into the so-called cash pool to make the February payment with the stipulation that it would repay the money in 60 days. Of course, not abiding by a similar condition is what put BT in its current financial predicament.

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About The Author

Shay Totten

Shay Totten

Shay Totten wrote "Fair Game," a weekly political column, from April 2008-December 2011.

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