Bankrupt C-block licensee General Wireless Inc. has satisfied too much of its reorganization plan for the Federal Communications Commission to appeal it, a Texas district court judge ruled last week.
GWI, which changed its name to Metro PCS in March, filed for Chapter 11 bankruptcy protection in 1997. A federal bankruptcy court in April 1998 revalued the company’s 14 C-block personal communications services licenses from $1.06 billion to $166 million, ruling the value of the licenses declined substantially by the time the FCC granted them to Metro PCS.
Since then, the commission has filed appeals, but was unable to delay Metro PCS’ hearing that confirmed the reorganization plan. Subsequently, Metro PCS’ debtors sought to dismiss the FCC’s appeal of the confirmation order and a portion of the bankruptcy court’s judgment because the company’s reorganization plan is nearly complete.
“We have consummated our plan of reorganization,” said Dennis Spickler, vice president and chief financial officer of Metro PCS. “This dismisses their appeal as moot. The district court is saying it doesn’t matter if there are merits to their underlying appeal because the reorganization plan has been consummated.”
This is a lesson the FCC has learned in its battle with another bankrupt C-block licensee, NextWave Telecom Inc., which successfully reduced its license fee from $4.7 billion to $1 billion earlier this year. The commission searched every legal avenue to prevent NextWave’s reorganization plan from being confirmed last month and won an emergency stay and then an indefinite stay from the U.S. Court of Appeals for the Second Circuit.
The FCC is contesting the New York U.S. bankruptcy court’s jurisdiction over it, taking the position that it is not a typical creditor but a federal agency whose status supersedes federal and state bankruptcy laws. Oral arguments are set for later this month.
Speculation is the FCC could appeal the Metro PCS case to the fifth circuit appeals court to argue jurisdiction if it is successful with its NextWave appeal.
“We’re reading the opinion and consulting with attorneys at the Department of Justice about our options,” said an FCC official.
Texas district court Judge Sam A. Lindsay ruled Metro PCS had substantially fulfilled its reorganization plan because, among other things, equity investors have funded about $5.1 million to Metro PCS, Lucent Technologies Inc. has given the company $30 million in vendor financing and the company has paid debts to Hyundai Electronics of America and unsecured creditors.
Metro PCS also has purchased Code Division Multiple Access equipment from Lucent and is designing plans for their network deployment. Metro PCS plans to offer service similar to what Leap Wireless Inc. introduced in Chattanooga, Tenn., as flat-rate unlimited-calling service limited only to the metropolitan area.
The FCC has been frustrated that C-block licensees have run to bankruptcy courts for relief. The commission is urging Congress to give it authority to take back radio spectrum licenses from carriers when they go bankrupt, including those held by Metro PCS and NextWave.
