BALTIMORE-At press time Friday, Judge E. Stephen Derby told parties in the Pocket
Communications Inc. bankruptcy case he would make a decision in the latest round of this convoluted case on Feb.
24.
The parties in the case were back in court locked in battle as Pocket tried to reverse its election, which Derby
approved in October and to which the Federal Communications Commission strenuously objected.
The Pocket
bankruptcy case stems from the C-block personal communications services auction debacle, which began in 1996.
Pocket bid more than $1 billion for 43 licenses, including licenses for Chicago and Dallas. Pocket was unable to find
sufficient financing to build out its licenses and make the necessary installment payments to the FCC.
Pocket filed
for bankruptcy in 1997, and last fall Derby allowed Pocket and its subsidiary, DCR PCS Inc., to give back a majority of
its licenses.
At that time, the debtors-in-possession lenders-Pacific Eagle Investments Ltd., Masa Telecom Asia
Investment, Ericsson Inc. and Siemens Information and Communications Network Inc.-opposed the judge authorizing
that decision. The unsecured creditors and Pocket owner Daniel Riker since have joined with the DiP lenders to ask
Derby to reverse his decision.
The government argued Pocket’s election could not be reversed because that would
result in a new election, which would be unfair to other C-block licensees, which were required to make an election on
June 8.
“[Pocket] simply cannot take a ‘mulligan’ on its election more than seven months after the deadline for
altering and two months after it became effective. The [Pocket] election was not a place-holder that [Pocket] could
select until something else came along … the United States did not know that the debtors and committee would reverse
course after the court approved the [Pocket] election,” the government said in its brief file on Tuesday.
Many
of the 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. The unsecured creditors and DiP lenders argued the only reason the FCC
objected to it giving back the licenses was a “strategic” move in the yet-to-be-decided fraudulent
conveyance litigation. “The objection is strategic. It is defensive to the litigation,” said Paul M. Nussbaum,
attorney for the unsecured creditors.
Meanwhile in the Nextwave bankruptcy case, the government last week lost its
argument that to protect the integrity of the C-block auction, Nextwave must be held accountable from the time the
gavel fell on the auction in the summer of 1996. The judge in the Nextwave case said Nextwave was not liable for debt
to the government until it received the licenses on Jan. 3, 1997.
The government and Nextwave are set to argue the
value of the licenses April 19 in White Plains, N.Y.
