BALTIMORE-Judge E. Stephen Derby last week denied a motion by Pocket Communications Inc. to
reverse its election, thus allowing the re-auction of all but 12 of Pocket’s licenses to go forward later this
month.
Derby’s decision was necessary after Pocket’s unsecured creditors, Pocket owner Daniel Riker and the
debtors-in-possession lenders-Pacific Eagle Investments Ltd., Masa Telecom Asia Investment, Ericsson Inc. and
Siemens Information and Communications Network Inc.-urged him to reverse the election last month.
Arguments
were heard on the request on Feb. 12, but Derby delayed his decision until Feb. 24. He indicated he will allow the DiP
lenders to ask for a stay of his decision because a stay would not impact the future of the licenses Pocket gave up as
part of its election. Derby approved that election, which gave back all but 12 of its licenses in return for the Federal
Communications Commission waiving claim to the debt Pocket incurred when it won 43 licenses for more than $1
billion.
The Pocket bankruptcy case stems from the C-block personal communications services auction debacle,
which began in 1996. Pocket was the second-largest winner of C-block licenses, including the large Chicago and Dallas
markets. Pocket was unable to find sufficient financing to build out its licenses and make the necessary installment
payments to the FCC.
Derby’s latest decision comes nearly two years after the company initially filed for
bankruptcy in April 1997. Last fall, Derby allowed Pocket and its subsidiary, DCR PCS Inc., to give back the majority
of licenses.
The authorization of that election was opposed at that time by the DiP lenders.
Derby said the
settlement proposed by the Pocket estate was a “sub rosa plan” because it did not take into account the
FCC’s position.
In papers filed with Derby’s court last month, the government argued the election could not be
reversed because that would result in a new election, which would be unfair to other C-block licensees, who were
required to make an election on June 8.
Many other C-block licensees decided to give back their licenses to the
FCC. The largest licensee, NextWave Telecom Inc., chose to follow Pocket into bankruptcy.
