NextWave Bankruptcy Judge Defers Ruling on Licenses
--From AOL News-- Cooters
White Plains, New York, Jan. 21 (Bloomberg) -- A U.S. bankruptcy judge today said he would defer ruling on whether NextWave Telecom Inc. should be allowed to pay the remaining $4.3 billion it owes on wireless telephone licenses it won at auction.
At a hearing today in White Plains, New York, company attorney Deborah Schrier-Rape told U.S. Bankruptcy Judge Adlai S. Hardin that NextWave is prepared to pay that amount in cash to keep the licenses.
Daniel Alter, an attorney for the Federal Communications Commission, which auctioned the licenses, contended that they were automatically cancelled in January 1999, after NextWave missed an interest payment on its debt to the FCC. The judge questioned Alter, insisting that he produce documents to show that the FCC had, in fact, declared NextWave in default.
Hardin, who has overseen NextWave's bankruptcy since the company filed for Chapter 11 protection in June 1998, said, ``When, if at all, was NextWave declared in default? None of the litigation in this court would have gone forward if there were no licenses as of January 1999.'
Hardin told Alter, ``I won't rule in your favor without a record of the default.'
The FCC announced last week it would reauction NextWave's licenses in July. The commission acted to reclaim the licenses after a federal appeals court reversed Hardin's decision to reduce NextWave's obligation for the licenses to about $1 billion and ruled that the bankruptcy court ``had no authority' to intervene in the FCC's system for allocating spectrum licenses.
Alter said the agency hadn't determined the exact date of NextWave's default, partly because the case was in bankruptcy litigation at the time. He said it was ``around' Jan. 1, 1999.
At the conclusion of the hearing, Hardin told both sides to submit additional papers to support their positions by 5 p.m. on Monday.
Winning Bids
NextWave submitted the winning bids for 90 licenses in FCC auctions starting in 1996, paying $500 million of the $4.8 billion it bid. The licenses cover markets with about 160 million people, including New York and Los Angeles.
Wireless licenses give the licensee the right to use radio spectrum to provide phone, paging, voice mail and other services to hand-held devices.
The FCC has maintained that it is acting as a regulator, rather than a creditor, in seeking to collect the full amount of NextWave's bids. Congress directed the FCC to use auctions as a way of allocating radio spectrum to the highest-valued uses.
NextWave filed for Chapter 11 bankruptcy protection in 1998 after it failed to raise enough money to make good on its bids.
The company, with new financial backing from AT&T Corp.'s Liberty Media Group Inc. and Global Crossing Ltd., last week told the FCC it would make a lump-sum payment of $4.3 billion to fulfill its outstanding debt for the licenses. The FCC rejected the offer.
Nextel Communications Inc., which operates a nationwide wireless network, is among companies interested in bidding for the licenses. The company abandoned plans for an $8.3 billion hostile bid for NextWave last month.
Jan/21/2000 20:20
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