WASHINGTON-Negotiations that led to a tentative agreement among the Department of Justice, the Federal Communications Commission and Nextel Communications Inc. allowing Nextel to buy licenses held by the bankrupt NextWave Telecom Inc. were both proper and normal in bankruptcy proceedings, Nextel and DOJ said in letters to Congress.
“Numerous courts acknowledge the Bankruptcy Code’s policy of fostering free negotiations among creditors, and recognize that it does not prohibit negotiations among creditors about a tentative plan … To protect legitimate government interests in bankruptcies, the [Justice Department] sometimes negotiates with other creditors during the exclusivity period about alternatives to a debtor’s reorganization plan,” said Jon P. Jennings, acting assistant attorney general.
Both Nextel and DOJ responded to inquiries Rep. Thomas Bliley (R-Va.) made last month. Both entities included with their letters documents and other information they requested not be released.
On Aug. 10, Nextel announced that DOJ and the FCC had agreed to allow it to buy NextWave’s licenses. A week later, it released a letter signed by FCC General Counsel Christopher Wright and a term sheet that said it would pay $2.1 billion for the licenses or receive a termination fee if the FCC chose to sell the licenses to another company through its higher and better offer process.
Bliley was told by Nextel that its motive in starting negotiations was to make use of fallow spectrum.
“Nextel initiated this process because it saw that, without assistance from a third party, the ongoing litigation would prevent use of the NextWave spectrum for the foreseeable future … Nextel is pleased to be a part of a process that should free valuable [personal communications service] spectrum in 63 markets from the bankruptcy morass while providing fair recoveries to NextWave’s debt and equity claimants, and reasonable compensation to the U.S. Treasury,” said Nextel Chairman Daniel F. Akerson.
Nextel and DOJ sent their letters the same week FCC Chairman William Kennard told Bliley that the letter signed by Wright does not bind either him or the other commissioners to agree to a deal.
When Congress returned from its August recess, Bliley sent a letter to Kennard with a series of pointed questions.
The questions focused on how licenses set aside for small businesses, known as designated entities, could be sold to a company, Nextel, that twice before had been rejected when it applied for DE status.
Unlike the Nextel and DOJ responses, Kennard’s response was very detailed.
In the response, Kennard names names, lays out the negotiation process, gives legal rationales for the DE waiver and supplied confidential and private documents but asked that due to the bankruptcy litigation these documents be kept confidential.
