According to the company, it believes that the bankruptcy filing will facilitate Allegiance?s ongoing discussions with its senior creditors and other stakeholders and enable it to conduct business as usual.

"Although we have not yet secured the agreement of our senior creditors, we believe we have a sound plan to restructure our balance sheet in line with current business realities," said Royce J. Holland, chairman and chief executive officer of Allegiance Telecom. "With approximately a quarter billion dollars of cash, Allegiance is free of the liquidity problems experienced by other telecom companies that have filed under Chapter 11. We believe this move is the best way to safeguard the value of our enterprise, reduce costs, and increase our competitive advantage in the market as we continue negotiations with our creditors."

Tom Lord, Allegiance's executive vice president for corporate development and chief financial officer added that the company expects to emerge in a much stronger position. "We continue to make progress in re-orienting our business to focus on achieving free cash flow from operations," said Lord. "We expect to emerge from this process with a stronger balance sheet which will enable us to better serve our customers and provide sustained facilities-based competition in the present communications market.?

Based in Dallas, Texas, Allegiance Telecom is a facilities-based telecommunications carrier serving the small and medium-sized enterprise market.