Web-hosting company, Exodus Communications, has filed for protection under Chapter 11 of the US bankruptcy laws as it tries to reorganise its business.
Wednesday's announcement was not altogether unexpected: the previous day, the company issued a statement that it had ceased trading on the Nasdaq stock exchange due to rumours of an impending filing.
The last trade valued an Exodus share at 17 cents. Its all-time high was $89.81 in March 2000.
In a statement on its website, Exodus said Chapter 11 "provides the most effective and expedient means to restructure the company in a process that will enable us to continue uninterrupted daily operations of our Internet Data Centres and offices."
Said recently appointed chief executive, Bill Krause: "This restructuring action ensures we have the wherewithal to do that, and our daily operations continue uninterrupted as before."
Krause, a former chairman of 3Com and experienced Silicon Valley entrepreneur, replaced former IBM executive Ellen Hancock when she departed Exodus earlier this month after a rollercoaster ride as CEO.
On Wednesday the company put a brave face on its predicament. It admitted it had over-expanded and over-estimated demand, but added: "We expect to emerge from the restructuring process with a more appropriate capital structure, sufficient cash to fund operations, and the ability to access capital to fund new growth initiatives."
Exodus, which runs 44 internet "server farms" on four continents, listed $5.98bn in assets and $4.44bn in debts in its bankruptcy papers.
To fund operations, the company said it had arranged a $200m bankruptcy credit line from General Electric GE Capital division.
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