WASHINGTON-NextWave Telecom Inc. on Friday asked the U.S. Supreme Court to overturn two decisions from a federal appeals court that said bankruptcy court did not have jurisdiction when the case involved the Federal Communications Commission’s regulatory powers.
“Unless overturned by this court, the [appeals-court decision] will engender widespread confusion regarding the hitherto unquestioned scope of bankruptcy jurisdiction, and create a massive jurisdictional loophole for federal agencies seeking to avoid bankruptcy-related claims asserted against them by debtors in bankruptcy,” said NextWave.
The U.S. Court of Appeals for the 2nd Circuit ruled in December and affirmed in May that bankruptcy law did not apply in the NextWave case because the FCC was using its regulatory powers in authorizing 90 wireless licenses to be paid in installment payments over 10 years.
NextWave never made an installment payment on its $4.3 billion debt, nor did it choose a variety of restructuring options the FCC offered. Instead, on June 8, 1998, it filed for bankruptcy protection.
After the 2nd Circuit’s original decision, NextWave offered to pay the FCC its full bid amount, but the agency refused.
“NextWave would prefer to pay its financial obligation to the government in full and start delivering new service offerings to consumers, but the company is forced to resort to the courts because of the FCC’s preference for additional litigation. The sad irony is that on Jan. 12, the U.S. Treasury would have received a payment of $4.3 billion and NextWave would be five months into its buildout; instead we are just at the beginning of a new phase of lengthy litigation in multiple federal courts,” said Michael Wack, a company spokesman.
The FCC is planning to re-auction NextWave’s licenses Nov. 29. The agency planned to re-auction the licenses in July, but pushed back the date after tentatively concluding large companies should be able to bid for the licenses, which originally were reserved for small businesses. Comments on this proposal are due June 22, with replies on June 30 and no meetings after July 12.
