Bankrupt NextWave Telecom Inc. and Nextel Communications Inc. have tentatively agreed to again extend terms of a temporary restraining order banning Nextel from proposing its own reorganization plan to NextWave’s creditors.
NextWave’s bankruptcy court initially granted the temporary restraining order (TRO) Aug. 13, but Nextel agreed not to challenge the order until Sept. 9-the day after NextWave was looking to receive approval on its reorganization plan in court. Nextel flustered the wireless industry when it announced it received blessings from the Federal Communications Commission and the Department of Justice to pursue NextWave’s licenses.
However, NextWave’s Chapter 11 reorganization hearing has been put on indefinite hold because of a recent ruling from the U.S. Court of Appeals for the Second Circuit. The FCC is protesting the New York U.S. Bankruptcy Court’s jurisdiction over the case. A hearing date has not been set.
The commission has been pursuing every legal avenue to stay the case. It feared that if the bankruptcy court accepted NextWave’s plan, then FCC appeals to overturn the court’s May ruling-which entitled NextWave to keep its 56 C-block licenses and reduce its debt to the FCC from $4.7 billion to $1 billion-will become moot.
Since NextWave and Nextel agreed to extend terms of the restraining order, the bankruptcy court no longer presides. If talks break down, NextWave will have to return to bankruptcy court for another restraining order.
“Both parties have agreed in principle to extend the TRO,” said a NextWave spokesman. “Those negotiations are ongoing.”
The restraining order effectively bans Nextel from proposing its own reorganization plan or conferring with creditors in secret. Nextel, however, can try to persuade creditors not to follow NextWave’s plan, though 99 percent of NextWave’s creditors already have voted in favor of the plan. Nextel did not return phone calls for comment.
