WASHINGTON-The long awaited decision from the U.S. Court of Appeals for the Second Circuit was released on Wednesday saying that communications-not bankruptcy-law is supreme and that a bankruptcy court could not interfere with how the Federal Communications Commission allocates licenses.
The Second Circuit’s order explains a decision released on Nov. 24 reversing a district court’s earlier ruling affirming that the FCC had erred when it awarded NextWave its licenses in 1996. Both the bankruptcy court and the district court had said the FCC had been fraudulent when it awarded the licenses. The Second Circuit disagreed.
Meanwhile, NextWave Telecom Inc. returned to bankruptcy court to defend against a hostile takeover from Nextel Communications Inc. claiming the bid violated the bankruptcy rules calling for an exclusivity period where only parties to a bankruptcy can discuss reorganization plans.
This is not the first time NextWave and Nextel have fought in Bankruptcy Judge Aldai Hardin’s court. In August, Nextel said it had reached an agreement with the FCC and the Department of Justice that would allow it to buy NextWave’s licenses or receive a termination fee if the FCC sold them to someone else. Hardin slapped a temporary restraining order on Nextel because it was not a party in the bankruptcy and could not participate while the exclusivity period was in place. That TRO was lifted by a district court on Dec. 15.
Nextel’s bid, filed with the Securities and Exchange Commission on Tuesday, would pay $5.3 billion to the FCC and $500 million in cash to other NextWave creditors. NextWave’s stockholders would receive Nextel stock worth $2.5 billion or about $10 per NextWave share.
Also on Tuesday, Nextel filed a petition with the FCC regarding the status of the NextWave licenses, which originally were set aside for small businesses. The FCC has indicated a willingness to waive the designated entity rules to allow Nextel to buy the NextWave licenses.
