Boston Data Center Files Chapter 11

The strong demand for IT hosting and services has made data center bankruptcy filings a rarity, but they still happen. 2N+1, a data center company in Somerville, Mass., filed for Chapter 11 protection on Friday, according to local media reports.

2N+1 was founded by industry veterans with experience at HarvardNet and Boston Datacenters. In 2008 the company began retrofitting a 45,000 square foot data center in a fiber-rich neighborhood in Somerville, across the street from a local utility NSTAR.

In 2008 the company said its colocation facility would provide 12 megawatts of power and support densities of 250 watts per square foot. The current specs for the facility cite power availability of 24 megawatts and up to 350 watts per square foot of power. The Boston Business Journal reports that 2N+1's largest unsecured creditor is Vigil Electric, a local electrical contractor.

Chapter 11 allows a company to continue operating while it restructures its debts. In April 2N+1 announced that it is "now up and running with a growing cadre of clients."

Bankruptcy filings for data center and telcom providers have been rare in recent years, but were common in the dot-bomb meltdown of 2001-2003, when providers such as Exodus, MFN/AboveNet, WorldCom and Relera filed for Chapter 11, largely from the financial stress of heavy borrowing to build data centers and networks. That overbuilding resulted in a huge imbalance between supply and demand.

Is there any chance of similar supply-demand imbalance today? We'll examine that issue this week on DCK.