Contempt Motion Based on Citibank's Apparent Misunderstanding of Stipulation


November 21, 2012
Contact:  Mike Kanarick

Contempt Motion Based on Citibank’s Apparent Misunderstanding of Stipulation

Burlington, VT – City Attorney Eileen Blackwood today reacted to Citibank’s contempt motion against the City of Burlington in the Burlington Telecom litigation by stating that the motion appears to be based on Citibank’s misunderstanding of a Joint Stipulation previously entered into by the City of Burlington and Citibank.  Recently, BT made allowable and necessary capital expenditures to replace certain equipment and software that was approaching the end of its useful life.

“Citibank, unfortunately, appears to have misunderstood the nature of the expenditures,” responded Blackwood.  “The City has fully complied with all the terms of the Stipulation and expects that Citibank’s motion for contempt will be denied.  The City has been seeking to open a dialogue between BT’s operational staff and Citibank’s workout staff, and Citibank’s misunderstanding of these capital expenditures underscores the need for those discussions to begin.”

On March 27, 2012, the City and Citibank entered into a Joint Stipulation, which then became an order of the Court.  Pursuant to that Stipulation, each month, the City pays 60% of the net cash flow of Burlington Telecom as follows: 1) approximately $33,000 per month - calculated on a monthly basis - is paid to the court as the interest on the approximately $16.9 million due to the City’s general fund; and 2) the balance is paid to Citibank.  The net cash flow is defined as the earnings before interest, taxes, depreciation, and amortization, but “less capital expenses incurred in the ordinary course for such current period.”

In October 2012, BT's capital expenditures were larger than the average run rate because of the equipment and software replacements.  Technical requirements necessitated replacement for this phase to be implemented as quickly as possible.  These expenditures, planned early in 2012, are within BT’s FY 2013 budget and had been expected.  They are exactly the type of expenditures contemplated by the Stipulation’s language referring to “capital expenses incurred in the ordinary course.”  In fact, BT notified the Public Service Board in its October 15, 2012 report that this concentration of expenditures would be coming and would affect the amount of the payment to Citibank in November. 

The City will file a formal response to the motion in the near future.


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