Chit Chat Mobile has filed Chapter 11 bankruptcy in an effort to settle a billing dispute with Sprint.
According to a report published by the Wichita Eagle, Chit Chat claims that data usage reports from Sprint were over 60 days late. The late reporting allowed customers to use large amounts of data undetected. Chit Chat spokesman, John Hennessy told the Eagle that some customers used as much as 10GB per day and 300GB in a month. According to a Hennessy, the company owes Sprint "several hundred thousand dollars". The company believes that it shouldn't be held responsible for Sprint's failure to provide timely usage information.
Chit Chat's data plans are capped, customers pay for a fixed amount of data, for example 3GB for $30. If Sprint's data reporting was as seriously delayed as Chit Chat claims, I think they have a case for claiming that they aren't responsible for data used by customers who exceeded their data allowances. Without accurate data reporting a MVNO has no way of knowing when to shut off the customers data.
Chapter 11 isn't necessarily a death knell for companies. It's actually intended to help companies repay their debts and return to profitability by letting a business keep operating while it reorganizes under oversight of a court. It lets stricken companies cancel contracts and delay creditor collection actions against it. Many well known firms have entered and emerged from Chapter 11 including General Motors, Texaco and United Airlines. Chit Chat is still in business and accepting new customers.