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Windstream in Peril After Losing Default Ruling to Aurelius

  • Hedge fund awarded $310 million in case tied to Uniti spinoff
  • Rural telecom company had warned of threat to its solvency
A bobblehead figurine is arranged for a photograph at the Aurelius Capital Management offices in New York.

A bobblehead figurine is arranged for a photograph at the Aurelius Capital Management offices in New York.

Photographer: Christopher Goodney/Bloomberg
Updated on

The fate of Windstream Holdings Inc. was cast into doubt after a court ruled that the rural phone company defaulted on its bonds in 2015 by spinning off Uniti Group Inc. Windstream shares fell as much as 43 percent in extended trading.

The ruling on Friday in Manhattan federal court is a victory for New York hedge fund Aurelius Capital Management LP, which contends that the deal unfairly stripped bondholders of assets that back up their investment. Windstream, which serves about 1.4 million consumers and small businesses in 18 states, has warned that a defeat could force it to seek bankruptcy protection or liquidation.