III. Financial Qualifications

To be granted a CPCN for authority to provide facilities-based and resold local exchange service, an applicant must demonstrate that it has $100,000 cash or cash equivalent to meet the firm's start-up expenses. The applicant must also demonstrate that it has sufficient additional resources to cover all deposits required by other telecommunications carriers in order to provide service in California.⁴ Applicant provided financial documentation that demonstrates that it meets the financial requirements.⁵

⁴ The financial standards for certification to operate as a CLC are set forth in D.95-12-056, Appendix C, Rule 4.B.

⁵ In a supplement to the application dated July 20, 2006, Applicant discloses that it previously sought Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York in June 2001. Applicant states that the Bankruptcy Court approved Applicant's reorganization plan in October 2002, and Applicant emerged from bankruptcy in November 2002.

Applicant explains that it did not enter the telecommunications industry until 1999, was unable to complete and light its network before the downward trend in the industry in 2001, and therefore did not have sufficient revenue to support its business at that time. As a result, Applicant filed for bankruptcy protection.

Applicant's financial documents filed with the Commission show that Applicant's resources are now more than adequate to meet the requirements for issuance of a CPCN authorizing the provision of limited facilities-based and resold services.

Under these circumstances, we do not believe that Applicant's previous bankruptcy disqualifies Applicant from qualifying for the expanded CPCN authority sought in this application.