WASHINGTON-Pocket Communications Inc., which won 42 licenses in the C-block personal communications services auction and then filed for Chapter 11 reorganization last March, may be throwing in the towel and putting its assets on the block.
According to a release from Stamford, Conn.-based National Telecom PCS Inc., a party to the Pocket bankruptcy proceeding, Pocket “admitted to a bankruptcy court judge in Baltimore (Dec. 15) that it had exhausted all of its reorganization options, had run out of money and will begin to liquidate.” Earlier this fall, NatTel had made an offer to buy Pocket out for $1.5 billion.
Any remaining cash at Pocket was spent on payroll, NatTel said, and all but six employees have left the company. Daniel and Janice Riker remain, but Pocket’s restructuring expert and its general counsel were released. Other financial arrangements have been made with lawyers, accountants and various professionals who have been working with Pocket to resolve its Chapter 11 situation.
Neither of the Rikers was available for comment, and calls to Pocket’s Baltimore-based bankruptcy attorney Paul Nussbaum were not returned at press time.
Pocket reportedly will vacate its Washington, D.C., headquarters within the next few days, and its remaining employees will be housed in offices provided by the company’s attorneys, Wilmer, Cutler & Pickering. Pocket then plans “to release [the attorneys] from liability for potential voidable preference litigation over monies paid by Pocket to the firm just prior to Pocket’s bankruptcy filing in March (approximately $300,000),” NatTel’s release disclosed.
The $4.8 million debtor-in-possession loan extended to Pocket by its largest creditors-Pacific Eagle, L.M. Ericsson and Siemens-Stromberg Carlson-last summer was due at the time of the hearing, but the group has given Pocket until Jan. 12, 1998, to make good on the loan. The Federal Communications Commission, which had allowed a subordination of its debt as a condition of the loan, also will allow Pocket to hand over its term sheet Jan. 12.
NatTel also reported that Pocket will be “attempting to sell its cell site and office leases in Las Vegas and Hawaii for approximately $250,000.” Pocket’s DiP lenders have expressed interest in assuming some the Midwestern licenses for approximately $500,000. If they choose to move forward, a plan will be filed with the FCC by Jan. 12; by that time, Pocket will have decided what to do with its remaining licenses, and it will be prepared to report such a decision to the commission by the Jan. 15 C-block PCS restructuring option deadline. If Pocket has no qualified buyers for its licenses, it will turn them back to the FCC in return for debt amnesty.
NatTel President Jack Robinson said he plans to file for all of Pocket’s licenses by Jan. 12 as well. “We’ve said from the very beginning that Pocket did not deserve to be a licensee.”
“NatTel’s billion-dollar antitrust lawsuit pending against Pocket means that Pocket cannot sell its only asset, the licenses, without NatTel having a prejudgment lien and attachment against the licenses,” Robinson continued. “That would be a fraudulent conveyance. I don’t want Pocket to spin off its only assets and leave me with nothing but a shell company at the end against which to satisfy our antitrust judgment.”
In addition, Robinson contended that Pocket’s DiP lenders have no legal chance of gaining any C-block licenses, first because they are not designated entities and second, because they are foreign-owned. “Pacific Eagle is based in Hong Kong, now part of communist China, which is not a World Trade Organization signatory,” he said. “So they won’t get any of the foreign relief after Jan. 1. Second, none of the DiP lenders qualify as designated entities, so they couldn’t hold the licenses in any event. Third, good luck to anyone in trying to buy licenses subject to NatTel’s petition to deny.”
