Rural internet service provider Xplore granted creditor protection

Rural internet service provider Xplore Inc. says it is insolvent and has been granted creditor protection while it aims to shore up its business by selling assets or restructuring.

The telecom company is facing a “looming liquidity crisis” and in recent months has missed two interest payments totalling more than $8.5-million, according to legal filings.

Despite efforts to work with its majority shareholders and lenders, the company said it has so far been unable to reach a recapitalization agreement that would allow it to carry out its business plan.

Before the court approval, the company had been “within days” of exhausting its limited remaining liquidity and would have been unable to make critical business payments, said William Aziz, serving as the company’s chief restructuring officer, in legal submissions.

Xplore’s situation is one example of the difficult conditions for smaller operators in Canada’s telecom sector, which in recent years has seen major consolidation of independent internet service providers.

The initial stay of proceedings, granted Wednesday by the Ontario Superior Court under the Companies’ Creditors Arrangement Act, will “stabilize and preserve the value” of the company and provide it with “necessary breathing room” as it seeks to find more sources of cash within the business.

It also grants the company access to some initial funding through a bridge loan – a short-term loan to cover a temporary funding gap – with creditors.

The telecom company has approximately 1,100 employees and provides internet service to hundreds of thousands of customers in rural areas across Canada. It said in a press release on Wednesday night that it will continue to serve customers and operate its networks.

Aside from Elon Musk’s Starlink , Xplore was the only company to bid on an Ontario government contract to provide satellite connectivity to rural communities. Starlink won the $100-million contract in 2024, but Premier Doug Ford cancelled the deal last year during trade tensions with the United States.

This is the second time in three years that Xplore has appealed for protection in light of funding difficulties. In 2024, the company sought protection from court as it pursued a restructuring, later closing a $1.6-billion recapitalization arrangement.

Since then, the company has faced a number of challenges.

First, Xplore said it has not been able to sell certain licences for spectrum – the invisible airwaves that carry telecommunications signals – as planned, following a government moratorium on the transfer of those assets since 2023.

Meanwhile, the company said it has dealt with delays and barriers to building out its fibre-optic network, and therefore has not yet received government subsidies that it will be paid once completing those projects.

The company is also experiencing greater competition from rivals, including satellite operators and larger telecom companies who have been entering the market. The company has experienced a 13-per-cent year-over-year decline in its subscriber base, as well as a drop in earnings, Mr. Aziz said in filings.

Starlink has emerged as a significant competitor in recent years, offering fast internet service directly to consumers through its low-earth-orbit satellite constellation. Canada does not currently have a comparable domestic alternative, and Prime Minister Mark Carney has said the country should diversify away from dependence on Mr. Musk’s company.

Following Wednesday’s initial stay on proceedings, Xplore said it will continue normal operations while pursing a strategic review of assets and possible next steps. These could include sales of non-core assets – for which it is already in advanced discussions with buyers – or a further recapitalization with its lenders.

In the short term, Xplore will now have access to $77-million in emergency funding under a debtor-in-possession facility from the company’s majority shareholder, New York private-equity company Stonepeak, and other lenders. This type of bridge loan is only available to companies who have filed for creditor protection.

Xplore must return to court within 10 days to secure access to the full debtor-in-possession facility, worth $154.5-million. That funding is expected to give the company enough liquidity to operate until next February, at which point it might need to seek additional financing.

FTI Consulting Canada Inc. is acting as monitor for the company.