A Chapter 11 bankruptcy reorganization of Frontier Communications is imminent, as the company is planning to skip a crucial $320 million debt payment to bondholders on March 15, automatically triggering a 30-day grace period before creditors can demand full payment of Frontier’s debt.

Bloomberg News notes this decision comes as Frontier prepares to file for bankruptcy as early as March 16, with a plan that will reduce its owed debts and turn over control of the phone company to creditors. Frontier has more than $17.5 billion in debt, which is becoming unmanageable for a company that has lost customers month after month for years.

A Frontier bankruptcy would jolt the telecom industry because it would be the largest failure of a telecom company since 2002’s bankruptcy of Worldcom, which used to include MCI.

Sources told the news organization Frontier was holding discussions this week with prospective lenders willing to provide a “debtor-in-possession loan” to the company. That loan would be essential to finance a restructuring of the troubled phone company, backed by giving lenders control over Frontier’s operations.

Multiple groups of bondholders will also be involved in the discussions, including activist shareholder Elliott Management Corp., which most recently pressured AT&T to improve its business model by focusing on its core businesses.

News of Frontier’s plan to miss bond payments caused a dramatic drop in Frontier’s stock price today, which was trading as low as 29 cents a share.