NEW YORK-With nearly $4 million in creditor claims against it deleted by a federal court in late December, Cellular Telephone Enterprises Inc. last week entered the end game of an acrimonious dispute. As a consequence, a key company subsidiary embarked on emerging from Chapter 11 bankruptcy proceedings.
The recent decisions by the U.S. Bankruptcy Court for the Eastern District of New York will permit Nationwide Paging Corp., Cellular Telephone’s wholly owned subsidiary, to begin operations on its own frequency as early as this month, said Edward Weiss, president of Cellular Telephone. The company sells cellular phones and pagers in 14 retail outlets in the New York City metropolitan area, and also serves as a wholesaler.
Cellular Telephone, which is based in the Bellerose section of Queens, N.Y., purchased Nationwide Paging Corp. in December 1991. As part of the purchase, Cellular Telephone agreed to provide Regional Communications Inc.-a joint venture partner of Nationwide prior to the sale-with a $400,000 promissory note for equipment, Weiss said. As a condition of receiving the promissory note, Regional Communications agreed to provide Cellular Telephone with a bill of sale for $400,000. But the bill of sale was not forthcoming, Weiss said.
Instead, Weiss said Cellular Telephone alleged in court documents, “there were secret meetings; the Valentine’s Day (1992) appointment of someone’s 80-year-old mother as secretary of Nationwide (during the sale transition period); forged, false and erroneous documents, and the theft of our equipment.”
Regional Communications, which is based in Paramus, N.J., and the old Nationwide’s other former venture partners tried through the courts to force the new Nationwide into Chapter 7, a form of bankruptcy that could have resulted in its liquidation, Weiss said. “We got it down to Chapter 11,” he added.
Anthony Sabino Jr., president of Regional Communications, characterized the dispute this way: “We entered into an agreement in early 1992, which fell apart by late 1992, to sell our 900 (MHz) private carrier paging to Nationwide.”
With the court’s dismissal of Cellular’s Nationwide subsidiary from Chapter 11 bankruptcy proceedings, Regional Communications agreed to withdraw claims of $1 million each against both parent company and subsidiary, according to news reports. The agreement also calls for Regional to return its paging system to Nationwide.
In exchange, Weiss said Cellular Telephone agreed to pay Regional $50,000 for equipment.
“Eventually, through litigation, we came up with a way for each party to get out of the deal, for them to buy us out,” Sabino said. “The bankruptcy court approved a settlement that both sides had reached out of court, and now we can get on with our regular business.”
Regional Communications is a wireless systems integrator that designs and installs wireless networks.
The court agreement with Regional Communications comprises half of the $4 million in claims dismissed in late December against Cellular Telephone or its Nationwide subsidiary. Cellular Telephone said it anticipates several more significant claims to be deleted as well, and this debt elimination will aid its reorganization plan.
