TelexFREE files for relief under bankruptcy code

Scott O'Connell Daily News staff

MARLBOROUGH – TelexFREE, an international telecommunications and multi-level marketing company that has its American headquarters in Marlborough, today announced it has filed for relief under the U.S. bankruptcy code to address “certain operational challenges.”

“We anticipate that our global operations will continue to provide our customers with the high-quality products and services they have come to expect,” Stuart MacMillan, interim Chief Executive Officer of TelexFREE, said in a press release.

“We are taking this major step because we continue to believe in our business, our products and the enthusiasm of our world-class team. We believe that this restructuring plan, which will include significant enhancements to our governance practices and internal controls, will help us to build a stronger and more sustainable financial and operational foundation for the future.”

The controversial company, whose operations have been shut down in Brazil, is currently under investigation by Massachusetts’s Secretary of State. Brazilian authorities said TelexFREE appeared to be a pyramid scheme, and a representative for Secretary of State William Galvin’s office has said the office is looking into the company because of its similarity to another multi-level marketing company operating in the region that the state ordered to be shut down last November.

In its announcement today, TelexFree said it has cash on hand on hand to support an ongoing company reorganization and to maintain services to its customers. It filed the petitions for relief in U.S. Bankruptcy Court for the District of Nevada.

“TelexFREE intends to use the Chapter 11 process to optimize its selling platform, address its liabilities and position itself to emerge as a stronger and more competitive company,” the press release said.

A spokesman for the company two weeks ago said TelexFREE was gearing its business model more toward sales of its Internet-based phone service. But some “associates” of the company, who signed up mainly to take advantage of a pay-for-advertising venture the company offers, were angered by TelexFREE’s sudden operational changes, one of which was a restriction on moving money from their company accounts unless they start selling the VOIP product.

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