While Nextel Communications Inc.’s pursuit of personal communications services licenses held by bankrupt NextWave Telecom Inc. appears to have come to an end, the Federal Communications Commission continues to search every avenue to stay the U.S. Bankruptcy Court’s confirmation of NextWave’s reorganization plan.
“The government has been seeking in every way possible to stay the confirmation of [NextWave’s] plan,” said Assistant U.S. Attorney Daniel Alter during a U.S. district court hearing last week on the FCC’s motion to stay NextWave’s bankruptcy judgment. The district court denied the motion.
NextWave’s confirmation hearing is set for Sept. 8. The FCC fears that if the bankruptcy court accepts 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.
The commission has filed a motion with the bankruptcy court to stay NextWave’s plan. A hearing is set for Wednesday.
The FCC’s other avenue, Nextel, may have hit a dead end. Nextel apparently will not challenge a temporary restraining order the bankruptcy court issued against the company that banned Nextel from approaching creditors with its own reorganization plan. That plan was crafted with the blessing of FCC staff and the U.S. Department of Justice.
NextWave announced it entered into an agreement with Nextel to extend until Sept. 9-when the reorganization hearing is over-the terms of the restraining order.
BFD Holding Ltd., the general partner of the super majority participant in NextWave Telecom Inc.’s Debtor in Possession loan, reaffirmed its support for NextWave’s reorganization plan and urged other creditors and equity holders to endorse the plan. NextWave said a substantial number of stakeholders already have voted for its reorganization plan.
Nextel did not comment by RCR press time.
Nextel’s announcement in recent weeks that it reached agreements with the commission and the DOJ to pursue NextWave’s PCS licenses angered several large carriers. They wondered why the FCC gave special consideration to Nextel-a company considered too large to qualify as a C-block license holder. The FCC on two occasions had denied Nextel’s request to bid for C-block spectrum.
Nextel last week in filings with the U.S. Securities and Exchange Commission revealed its agreements with the FCC and the DOJ. A letter from FCC General Counsel Chris Wright and Raymond Fisher, associate attorney general with the DOJ, which represents the FCC in bankruptcy litigation, indicated the relevant FCC staff would recommend to the commission that it accept and agree to support Nextel’s plans to take over NextWave’s licenses. It’s not clear how FCC staff could garner support from the commission. Such an agreement would require significant FCC waivers and a lengthy rule making process as well as changing designated-entity procedures in Congress. Congress approved those rules to give small businesses a chance to compete in the mobile-phone industry.
Sources close to the companies said Nextel approached NextWave and its creditors in recent weeks, saying it had worked out a deal with the FCC. The creditors demanded written proof, requiring Nextel to approach certain commission staff and ask for a deal in writing.
Wireless operators still question the FCC’s motive and remain confused on the FCC’s position going forward on C-block rules. Several large carriers said they want access to C-block spectrum as well. The FCC will not comment on the matter due to “the posture of the case in the bankruptcy court,” said one FCC spokesman. The FCC hasn’t returned phone calls from wireless operators either.
Nextel’s deal reached with Wright and Fisher called for the FCC to receive at least $2.1 billion for NextWave’s spectrum, about $1 billion more than NextWave’s current tab.
The FCC has been frustrated that C-block licensees have run to bankruptcy courts for relief. The commission is urging Congress to give it authority to take back radio spectrum licenses from carriers when they go bankrupt, including NextWave and Metro PCS (formerly known as General Wireless Inc.), which already have received favorable rulings in bankruptcy court.
