Kansas City, Mo. ? Birch Telecom Inc., citing the downturn in the telecommunications industry, filed for Chapter 11 bankruptcy protection Monday.

David E. Scott, president and chief executive officer of Birch, said most of the company’s creditors support its prepackaged reorganization plan, which was included in the company’s Delaware bankruptcy filing. Birch, which provides local telephone, long-distance and Internet services, hopes to reduce its debt from $310 million to $100 million.

“We anticipate a very swift emergence from Chapter 11,” Scott said.

The reorganization plan has been in the works since last November, Scott said.

Under the plan, nine banks will forgive $95 million of $195 million in debt for an 80 percent ownership stake in the company, Scott said. Bondholders will receive a 20 percent ownership stake for about $115 million in debt.

A few common shareholders, as well as preferred shareholders including investment firm Kohlberg Kravis Roberts and Co., which owned over 90 percent of the equity in the company will lose their equity, Scott said.

But he said the company’s operations will continue as is. With the reorganization plan, Scott said, the company is “not really not dependent on a rebound of the industry or even the economy.”

Kansas City, Mo.-based Birch, which was founded in 1997 to take on SBC Southwestern Bell in the local telephone business, has had to lay off nearly a quarter of its workers. Last May, it called off an initial public stock offering, citing “adverse marketing conditions.” Later that year, it skipped an $8 million interest payment.

“I guess you might say we took our medicine very early on,” Scott said, adding that the company would not have to lay off any more of its 1,200 employees.

Birch already has cut its operating losses, Scott said.

During the first quarter of 2002, operating losses were $2 million, compared with $30 million in the first quarter of 2001.