BALTIMORE-After a 95-minute delay during which 15 attorneys negotiated the Pocket Communications Inc. bankruptcy case last Thursday at the courthouse cafeteria here, the bankruptcy judge said Pocket can participate in today’s C-block elections but that its selection will be held in abeyance until at least October pending the outcome of the current negotiations.
Judge E. Stephen Derby of the U.S. Bankruptcy Court for the District of Maryland-Northern District also extended the date by which Pocket must return its licenses to the Federal Communications Commission to July 7.
The date has been extended numerous times this year and was set to expire last Friday.
The action in Judge Derby’s courtroom was termed a non-event by some of the participants since Derby accepted the agreement worked out by the 15 lawyers.
The stipulation allows for the following:
Reserves the right of the parties to seek a deal similar to the deal given to General Wireless Inc. in a Texas bankruptcy court;
If at any point before Sept. 30 Pocket decides the negotiations have failed, the company can ask for its C-block election to be effective. This action can be pre-empted by the federal government and the debtors-in-possession lenders; and
The DiP lenders have agreed not to ask for any judicial relief until October unless the FCC does not extend the drop-dead date.
The lawyers negotiated the agreement to prevent a fight over whether the debtors had a right to make an effective election, Paul Nussbaum, counsel for Pocket told Derby. An election by Pocket could effectively end the bankruptcy proceeding. It had been expected this issue would be argued but was pre-empted by the negotiated agreement. One lawyer close to the negotiations even said the judicial debate over Pocket’s right to make an effective election could have taken much longer than the 95-minute delay.
The FCC is allowing all C-block licensees today to choose one of three debt-restructuring options, including disaggregation, amnesty or prepayment, or to resume payments on July 31.
The lawyers negotiated late into the night on Wednesday and Thursday morning to prevent other appearances before Derby before fall, but given all of the exceptions contained in the agreement, anything could happen, Nussbaum said. Derby was especially concerned about the drop-dead date being the day after the 4th of July holiday, and he urged the attorneys to let him know as soon as possible if he will be required to take action on this issue.
The federal government is continuing to review alternative proposals made last month to replace the proposed transaction the government is negotiating with the DiP lenders, the Department of Justice’s Lloyd Randolph told Derby. The DiP lenders, Ericsson Inc., Siemens Telecom Networks, Masa Telecom Inc. and Pacific Eagle Investments Ltd., want to create a new company, NewGSM Co., to take control and build out the Dallas and Chicago markets. The rest of Pocket’s licenses would be returned the FCC for re-auction.
The details of the original proposed transaction were released by the FCC March 23, but it appears from comments by FCC officials that in addition to reviewing the alternative proposals, the FCC also is attempting to negotiate with the DiP lenders for a better deal.
One of the alternatives is “attractive to the [government] but also has some minuses,” Randolph said.
It is believed the FCC received six “higher and better offers.” FCC sources would only confirm this number is in the ballpark. The proposals were submitted by National Telecom PCS, Western Wireless Corp., Omnipoint Communications Inc., Arch Telecom, Hawaii PCS and Edward Johnson, said Jack E. Robinson, president of NatTel.
The proposal from Hawaii PCS only deals with the Hawaii licenses, said Gloria Borland, chairman and CEO of Hawaii PCS. Hawaii PCS owns 5 percent of the Hawaii licenses while Pocket owns the other 95 percent.
Pocket bid $1.3 billion for 43 licenses for markets, including Chicago, New Orleans, Honolulu, Dallas, Las Vegas and St. Louis.
In a related move, the U.S. Court of Appeals for the District of Columbia late Friday denied Next Wave Telecom Inc.’s request to stay the C-Block elections. A similar request to the FCC was rejected last week prompting the appeals court action. “We are disappointed by today’s ruling from the appeals court to deny our motion to stay the June 8 election date. We are considering our options under the restructuring order relative to the June 8 election date,” said Kevin Christiano, Next Wave’s spokesman.
