The main problem we had was lack of capital to fund our expansion. We were in a catch-22 at the time. Our investors didn't want to give us additional capital until we had leased the 'hard-to-get' spaces within popular telco-hotels around the country. The landlords didn't want to lease us space until we had the money to build out the spaces (typically $10MM per location). By July 2001 we had more than $1,000,000 in monthly lease payments for spaces we didn't have the funds to complete. It was a nightmare. Once we filed Chapter 11 we were able to immediately reject the leases that we had not built out. By cutting heads from around 60 to 16 I think and keeping only our profitable or breakeven facilities we were cashflow neutral almost immediately. It took a couple of months and we became profitable. Of course, it was easy without the leases.
At the end of the day, if I knew that I would ONLY have $20MM to build my business I could have done a great job. The problem was that I thought I was going to have $120MM to build it - I built an infrastructure to support a $100MM business, not a $20MM. Does this make sense?