The New York-based company, which will continue to operate without interruption, said that the bankruptcy did not affect Metromedia Fiber Network Government Services.
MFN spokeswoman Kara Carbone said the company has reached an agreement with its senior secured lenders that will allow it to continue operations while taking steps to become profitable.
Among other measures, MFN will dispose of non-productive properties including idle datacentres and non-essential offices, although the company does not yet know which properties will be affected.
Carbone said MFN was reviewing its vendor contracts and will reject those that are not in the company's best interest. She said MFN will also cut jobs, but could not specify how many.
"First and foremost, I want to assure our customers that our top-notch service levels will not be compromised by the reorganisation process," said John Gerdelman, president and chief executive officer of MFN.
Gerdelman blamed the company's financial problems on the lack of demand for its services.
MFN has hired financial advisory firm Impala Partners to assist in the restructuring and UBS Warburg to advise on strategic alternatives.