Ben Bronston In The News: Windstream Partners Receiving Intimidating Notices

EXCERPT FROM CHANNEL PARTNERS:

Ben Bronston, a longtime industry lawyer and authority on agent agreements, said he’s been contacted by many agents who are upset by the letter they received from Windstream. However, this certainly isn’t the first time that something like this has happened in the industry or channel, he said.

“There have certainly been other bankruptcies where agent agreements are subject to cancellation,” he said. “For example, in the TNCI bankruptcy, they did not assume all of the agent agreements. In fact, when they were acquired, TNCI was required to reject several agreements that the acquirer didn’t want. The bottom line is that bankruptcy is the single biggest risk of the agent model. It’s a great business from a cash-flow standpoint; it’s even become attractive in terms of the potential for selling your agency. But as an agent you have far fewer sources of payment, so if one of your provider partners goes under and decides to reject your agent agreement as part of bankruptcy process, then you’re out of luck.”

The problem for agents is that as part of the bankruptcy process, Windstream “can put conditions on the assumption of agent agreements, like they’ve done here where the agent has to produce a certain amount of revenue within the first six months and their base can’t shrink beyond a certain percentage,” Bronston said.

Agents have a difficult decision to make regarding whether they’re willing to sign the agreement because Windstream is “holding these commitments over [their] heads, and it’s very difficult to sell Windstream right now because people either know they’re in bankruptcy or they’ve had bad experiences reqarding network performance or billing, or what have you,” he said. “My thought is agents should sign the revised agreement and live to fight another day because if they don’t, Windstream will cut them off and they’ll have nothing.”

As for evergreen, Bronston said “an evergreen clause is critically important for any agent agreement assuming the provider is going to stay in business, but if it goes bankrupt, all bets are off.”

“The bigger producers are the ones a bankrupt company are going to want to keep happy, so they are often the ones that end up coming out whole or close to it [post-bankruptcy],” he said. “The smaller guys are the ones who oftentimes end up getting left out in the cold.”

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