Phone service provider files for protection

Advertiser Staff

Summit Communications Inc., a 6-year-old Honolulu-based telecommunications company with 40 employees, has filed for Chapter 11 bankruptcy protection, citing a general decline in the industry and the effects of Sept. 11.

The company, which competes with Verizon Hawaii as a local and long-distance phone service provider, will continue operations and hopes to emerge from bankruptcy within a year, said president Grant Johnston.

"Our purpose for filing a Chapter 11 is not to get out of our commitments," said Johnston. "It is simply to provide some relief on a temporary basis, to regroup and get back on track."

Summit is the latest in a string of high-technology companies based in Hawai'i to run into difficulty. Adtech laid off about 45 workers as demand for its telecommunications test equipment declined; online translation firm WorldPoint eventually shrank from a 120-employee operation to a bankrupt one-man firm; and Ohana Foundation, a nonprofit developer of educational software, closed in the fall and laid off about 90 workers.

"I think the environment will eventually become favorable again for high-tech startups," said Johnston. "The fact that a lot of the startups have not succeeded is not just here in Hawai'i but nationwide."

Summit has dropped from a peak of 55 employees in June 2001 to the current 40 and has also cut salaries, Johnston said. "At this point, we have no intention of reducing staff (further)," he added

Johnston said the company has contracts to provide long-distance and local telephone service to time-share condominiums. Since the Sept. 11 attacks, the number of visitors to those buildings has declined .

Summit listed between $1 million and $10 million in assets and liabilities.

"We have to meet with the creditors to put together the reorganization plan," said Steven Guttman, the attorney representing Summit. "I'm optimistic we will have an agreement."