HomeNet owes Provo and other creditors

PROVO — Provo may never see $200,000 owed to the city by HomeNet, the original service provider on the iProvo network, because the company has filed for Chapter 11 bankruptcy protection.

HomeNet Communications Inc. is down to two employees as it navigates bankruptcy proceedings. In a court filing on Wednesday, the company listed assets of $172,918 and liabilities of $5.1 million.

More than 20 other Utah groups are listed as creditors with total claims in excess of $1 million, according to documents filed in U.S. Bankruptcy Court in Seattle.

Provo has been mentioned as a possible lawsuit target by a Utah company that believes the city should be accountable when service providers on the iProvo network don't pay their bills.

Meanwhile, city officials are considering a press conference to celebrate iProvo's 5,000th subscriber, a milestone that should be reached soon, said Kevin Garlick, director of Provo's power department. The telecommunications project that brings low-cost telephone, Internet and video services to Provo homes needs 10,000 subscribers to pay back a $40 million bond.

Construction is on schedule and expected to be complete this spring. Mayor Lewis Billings says subscriptions also are on schedule. Most of the glitches experienced by some subscribers in the transition from HomeNet to new service providers Veracity and MStar appear to be over.

Court documents show that HomeNet does not dispute it owes Provo $11,343.83. But sources have told the Deseret Morning News that HomeNet owed Provo more than $300,000 when it left town last summer.

Garlick said HomeNet did make a payment to Provo late last summer and put it in the $100,000 range.

Provo officials have repeatedly turned down requests for the exact amount HomeNet owes. The Deseret Morning News requested the figure again this week. Later the same day, HomeNet's attorney amended a 43-page report to add one line, showing Provo claimed HomeNet owed the city $200,000. The claim is listed as disputed.

All of Provo's claims are listed as unsecured, nonpriority claims, which means the city is at the back of the line with dozens of other companies behind secured creditors and priority unsecured creditors. The city had negotiated a settlement agreement with HomeNet when it learned another company had filed involuntary bankruptcy proceedings against HomeNet, Garlick said.

"What that has done is put the settlement agreement we had worked out before the bankruptcy courts," he said. "It isn't really clear what items we'll be able to recover and what items we won't be able to recover."