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NAME: Juliette Williams Pryor TITLE: Senior vice president, general counsel and corporate secretary AGE: 36 ORGANIZATION: Herndon, Va.-based e.spire Communications Inc. is a telephone and Web site hosting service catering to small- and medium-size businesses and municipal governments. With 1,650 employees, $344 million in revenue and $885 million in net assets, e.spire sells a combination of local, long-distance, dedicated Internet access and advanced data services throughout the country. The company, finding it impossible to restructure its debt early this year, filed a voluntary petition for Chapter 11 bankruptcy reorganization on March 22 in U.S. Bankruptcy Court in Delaware. DEPARTMENT: Pryor manages six lawyers and a $4 million budget that could easily exceed $5 million when bankruptcy-related fees are figured in. Several lawyers work on regulatory matters, which for a telephone company like e.spire vary from state to state and are extremely important. “The activity of the regulatory group is to advocate the rights of the company as we compete against the Baby Bells,” says Pryor. Individual lawyers also handle labor, employment, securities and corporate compliance matters, and provide support for subsidiaries and e.spire’s fiber optics network. The legal team also manages 92 real estate leases across the country for its 51 subsidiaries. On top of all this, the staff must coordinate the all-important bankruptcy motions. “We have a heavy workload,” says Pryor. HER JOB: Pryor has been forced to bone up on federal bankruptcy laws at a rapid pace so as to field questions from vendors and clients about e.spire’s ability to pay its bills and the future of the high-tech company. Despite the bankruptcy, Pryor continues to negotiate merger, acquisition and divestiture agreements and complex commercial transactions; ensure corporate compliance with financing arrangements; develop and enforce corporate policies on insider trading and use of e-mail; manage litigation; and provide counsel to e.spire’s most profitable subsidiaries. BANKRUPTCY: The economic downturn hit the high-tech telecommunications sector hard; e.spire’s telecom rivals like GST, Winstar, Teligent, PSI Net and Pathnet all jumped on the bankruptcy bandwagon by early 2001. At e.spire, new management in April 2000 ushered in revenue growth of more than $100 million and earnings that finally edged into the black. But financing became a problem. By the fall of 2000, e.spire had entered into an agreement with its bondholders to restructure $850 million in debt but was unable to find financing to consummate the plan. “The pivotal issue behind the bankruptcy filing was restructuring the balance sheet,” says Pryor. “We entered into negotiations with our bondholders to equitize our debt, but were unable to get financing outside of bankruptcy. Lenders prefer a debtor-in-possession to protect themselves.” The company is functioning on $85 million debtor-in-possession financing that pays for employees, vendors and suppliers and routine capital expenditures during the reorganization. E.spire is currently seeking exit financing to complete its plan and is expected to emerge from Chapter 11 as early as September. BANKRUPTCY LESSON: Be prepared to take charge; reporting is key. During the reorganization process, in-house lawyers essentially run the company. They’re responsible for ensuring that top executives take no action without first notifying the oversight committee, the bankruptcy trustee and lawyers for the creditors and debtors and, most importantly, getting court approval. Making it tougher yet, all requests must be filed 20 days before the court approval is sought. “It’s a completely different mindset for top management used to running the company,” says Pryor. “We have to be on top of it. We’re in a constant state of reporting, reaffirming that actions taken are approved.” In addition, while they’d like to emerge from Chapter 11 as soon as possible, Pryor is also pushing top management to clean up e.spire’s weak links so that it emerges as a lean, mean machine. For example, the company has the 92 real estate leases; it’s an opportunity to look at which ones they can and should reassign. Finally, on top of her monitoring role, it’s incumbent on Pryor to keep outside counsel costs to a minimum — “not an easy task when the company in bankruptcy pays for everybody at the party,” she says. LITIGATION: Suits in which e.spire is a defendant have been stayed by the Chapter 11 bankruptcy judge. The automatic stay also froze e.spire’s financial obligations incurred prior to the filing. Just before bankruptcy, though, e.spire was named in a class action shareholder suit claiming that the company had not accurately reported and recorded revenues on its long-term leases. The dispute grew out of a new accounting rule in 1999 on revenues from long-term leases of properties, saying they should be recognized over the life of the contract, and not all at once, up front, says Pryor. Applying the change in the fourth quarter of 1999 resulted in a $2 million shortfall in annualized revenue, which triggered the suit. The case was dismissed with prejudice by a Maryland judge last year, according to Pryor. The stayed litigation involves construction suits, mostly by contractors, over slip-and-falls, fiber cuts and water-main breaks. EMERGENCE FROM BANKRUPTCY: The job falls mostly on Pryor’s shoulders. Once the company secures exit financing, e.spire’s lawyers will submit its proposed plan of reorganization and a disclosure statement for shareholders to the bankruptcy judge. Pryor’s department will also send a notice to creditors, shareholders and employees along with a copy of the disclosure statement to allow for stakeholders to file possible objections. At that point, the bankruptcy judge will be asked to approve the disclosure statement and to consider confirming the plan, which is sent out to all the interested parties along with ballots, which they are asked to return. The court will then conduct a hearing on the proposed plan, and if it’s approved, e.spire will eventually emerge from the process with a financial structure designed to provide for long-term growth. “We’re trying to resolve this as expeditiously as possible,” says Pryor. “We expect to emerge with a strong balance sheet and as an even stronger business.” OUTSIDE COUNSEL: Securities lawyer Kevin Collins of the New York office of Minneapolis’ Dorsey & Whitney; telecommunications and regulatory lawyer Bradley Mutschelknaus of New York’s Kelly Drye and Warren; New York’s Skadden Arps Slate Meager & Flom for a variety of legal matters; and bankruptcy counsel Greg Milmoe and Dominic Pacitti, partners in the Wilmington, Del., office of Philadelphia’s Saul Ewing. ROUTE TO THE TOP: Pryor, who speaks fluent Portuguese and Spanish, earned a B.A. in political science from Fisk University in Nashville, Tenn., in 1986, and, in 1991, a M.S. in foreign service and a law degree from Georgetown University. Her first job as a lawyer was in-house at IBM in Washington, D.C., from 1991 to 1994. Her next job was advising Janet A. Nuzum, vice chairman of the U.S. International Trade Commission in Washington, D.C., from 1994 to 1997, where she worked on anti-dumping issues, intellectual property rights and trade and development issues with Sub-Saharan Africa and Asia. She went back in-house at e.spire in 1997 as associate general counsel, creating customer and vendor agreements and negotiating the purchase of Internet service providers. In March 2000, she was tapped to become e.spire’s top lawyer. The mother of two young children, Pryor remembers negotiating the CyberGate acquisition while she was in labor and delivery with her youngest child. She worked right up until her due date, wearing a beeper around her waist while she was 8-1/2 months pregnant. FAMILY: A New York native, Pryor grew up in Brooklyn and up the Hudson River in Newburg. She is married to a lawyer, Walter Pryor, a former partner in the Washington office of Jones, Day, Reavis & Pogue, who abandoned firm life to become deputy director of the National Association of Attorneys General. They have two children, Jordan Adjua, 7, and Wade Osei, 3. LAST BOOK READ: “The Chinaberry Tree,” by Jesse Faucet.

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