Chit Chat Holdings files Chapter 11 bankruptcy to settle billing dispute

UPDATED– Chit Chat Holdings has filed Chapter 11 bankruptcy as a way to settle a billing dispute, says John Hennessy, a member of the company.

“It’s a discrepancy in billing with Sprint,” he says. “A big one.”

Hennessy won’t give specific numbers, but he says the dispute is over “several hundred thousand dollars” of data usage.

“It’s real complicated,” Hennessy says.

Chit Chat used to have retail outlets but now is a mobile virtual network operator. That means it is distributing phone service by buying service through major telecommunications companies and repackaging and selling it.

Late last year, Chit Chat began service in New York City and other East Coast areas through a company that Sprint purchased.

“We didn’t receive the billing information in a timely manner,” Hennessy says.

He says information about data usage came more than 60 days late.

Chit Chat has a monitoring company that monitors usage.

“This monitoring company didn’t receive this information either,” Hennessy says. “And consequently it left us holding the bag.”

Sprint spokeswoman Stephanie Vinge Walsh won’t discuss specifics of the situation.

“While we aren’t commenting at this time on the details of this customer relationship, we value our wholesale customers, including Chit Chat, and work hard to support them,” she said via e-mail.

“Sprint is trying to tell us that we’re responsible … for that usage, and we’re telling them, ‘No, we’re not,’” Hennessy says.

“We couldn’t come to any satisfactory resolution to this issue,” he says. “It’s too big to just pay and walk away from.”

Hennessy says Chit Chat has a good relationship with Sprint’s sales department.

“These big entities like this, you’re dealing with different groups and different branches within the companies,” he says. “It’s not like you’re dealing with one individual that has complete control over a company.”

Hennessy says Chit Chat can’t sue Sprint without jeopardizing its contract with the company.

“There’s different conditions that they can breach your contract,” he says. “We still spend a lot of money with them.”

Hennessy says the bankruptcy filing is about finding some common ground.

“The only place we’re going to be able to work it out is in a Chapter 11,” he says.

“There was no other options for us to do besides this,” Hennessy says, “… besides pay a bill that we don’t feel like we owe.”

He says without the data information coming in regularly, customers were able to take advantage of the situation.

“What happens is you have people who abuse the system,” Hennessy says.

“I had people using 10 gigs a day,” he says. “How somebody uses 300 gigs a month, we don’t understand what they were doing.”

Hennessy says he thinks the bankruptcy filing will resolve the issue.

“It’s a whole different ball game now that we’re in,” he says.

“Then you can move forward. You can go ahead with your relationship.”