BALTIMORE-A creditors’ committee made up of the seven largest owners of unsecured debt in C-block winner Pocket Communications Inc. was chosen by the U.S. Trustee’s Office in Baltimore April 16 to address the direction Pocket’s Chapter 11 bankruptcy will take and to suggest solutions. Prior to its next scheduled open meeting May 7, the committee will choose an attorney and a financial adviser.
Representatives from Booz Allen & Hamilton; Bohne; Brightpoint Inc.; CE Capital Consultants; Danet Inc.; LCC L.L.C.; and YTI, whose companies are owed anywhere from $300,000 to $13 million, were chosen by assistant U.S. Trustee Karen Moore from questionnaires filled out by the standing-room-only crowd. One group of creditors made up of five Asian investors in Pocket tried but was unsuccessful in gaining a seat on the committee because Moore determined that, despite its efforts to prove otherwise, the group not only was both a secured and unsecured debt holder, it held equity in Pocket; equity holders are excluded by law from participating on a creditors’ committee. Those who were not chosen to serve on the committee still have mechanisms to make their concerns known, Moore assured.
Also not making the committee cut was Jack E. Robinson, president of National Telecom Inc., which has a billion-dollar-plus antitrust suit pending against Pocket. Robinson argued with Moore that several of the newly chosen members were either equity holders or company insiders, including Booz Hamilton, CE Capital and LCC. Moore answered that because each held less than a 20 percent equity stake, they were permitted to serve.
She invited Robinson to put his claim in front of the court for review, a move he says he will make.
Pocket chief executive Dan Riker “did his job,” Robinson commented after the meeting. “He’s got a committee of insiders.” Other creditors doubt that Riker will have much to do with Pocket following resolution of this situation.
Several long breaks in the meeting allowed creditors a chance to compare notes. A representative of L.M. Ericsson reiterated that, despite what Pocket had been telling the industry regarding its reasons for filing for bankruptcy protection, the manufacturer had not supported such a move.
Another attendee, who had been laid off by Pocket during its recent cutbacks, wondered if there was going to be enough money left for him to collect the severance package he was promised and if the committee would suggest an immediate move to Chapter 7 liquidation.
Daniel Carpenter, himself a bankruptcy attorney in addition to being chairman of National Telecom, told RCR that the U.S. Trustee did not know until the day of the meeting that, if the committee chooses to sell the assets of the company, Pocket’s licenses could only be transferred to another C-block eligible player. “This case will be different from any normal bankruptcy case,” he said. There were others in the room who added that this case “was going to be more exciting than the O.J. Simpson trial.”
In a brief statement to the assembled creditors prior to choosing the committee, Pocket counsel Paul Nussbaum said his client would be meeting with the committee as early as today, adding, “Lots has happened since we filed on March 31.” Nussbaum said that Pocket had enough operating cash to keep going “for several months,” and that it has been pursuing additional funding during the last two weeks.