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Data centre venture files for bankruptcy

Crosswave Communications, an internet data centre provider and data communications carrier established by Sony, Toyota and Internet Initiative Japan (IIJ), filed for corporate reorganisation proceedings yesterday.

After the voluntary filing in Tokyo, an administrator was appointed to protect the company's assets from creditors. The filing covers Crosswave and two local subsidiaries but does not include its US unit, Crosswave Communications America.

The company was formed in 1998. By the end of 1999 it had built a nationwide access network and had also obtained licences for a planned wireless service, and a year later was expanding the number of data centres it operated and pushing into South Korea.

However, Crosswave never made any money. Liabilities exceeded assets when measured under US generally accepted accounting practices (GAAP) as of the end of June.

The company blamed "severe price competition" in the domestic market and the economic downturn for its woes. It will go on providing services while the court-appointed administrator makes a decision on whether the company has a good chance of survival.

Following Crosswave's announcement, IIJ said it the reorganisation of Crosswave will "substantially impact" its own financial position and earnings but said it did not plan to follow Crosswave with a reorganisation filing.

IIJ is one of Japan's oldest internet access providers and provided much of the engineering backing to Crosswave. IIJ president Koichi Suzuki also served as president of Crosswave.

Martyn Williams writes for IDG News Service


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