McLeod joins chapter 11 telco club

But can it make it out the other side?

US telco, McLeodUSA has become the latest telecommunications organisation to file for Chapter 11 protection from its creditors.

New Yorker Teddy Forstmann, the acquisition investor who steers a large portion of the organisation said the company - worth $19bn in its heyday - had the backing of its banks for a reorganisation of debts.

Many of the company's bondholders were also behind Forstmann who campaigned heavily for a debt restructuring to take place under the cover of a Chapter 11 blanket.

McLeodUSA owes $4.3bn. Forstmann said he will invest a further $175m into the company on top of his current $1bn investment.

With the banks' backing, the company is likely to restructure quickly and come out smaller but healthy.

The filing comes hot on the heels of Global Crossing's crash from glory and highlights the plight of two more US companies, Level 3 and Williams Communications.