May 18, 2000
Dow Jones Newswires
Nextwave Causes Heartburn In US
Bankruptcy Bill Talks
By DAWN KOPECKI
WASHINGTON -- Of the handful of issues remaining to be resolved on the
bankruptcy bill, one is giving lawmakers a particularly strong dose of
heartburn this week, Republican and Democratic aides said.
That's partly because the issue wasn't an issue for lawmakers a few months
ago. The matter currently in dispute wasn't included in either the bankruptcy
bill passed by the House in 1999 or the bankruptcy bill passed by the Senate
earlier this year. In fact, it wasn't even discussed.
But now lawmakers are being pushed and pulled between the White House,
the Federal Communications Commission and high-powered lobbyists like
Haley Barbour, the former chairman of the Republican National Committee.
Powerful telecommunications companies like Qualcomm Inc. (QCOM) and
Nextel Communications Inc. (NXTL) have their own hired guns hot on the
issue.
The fuss is over would-be wireless communications provider Nextwave
Telecom Inc. (X.NWV) and its valuable spectrum licenses that are currently
hung up in a bankruptcy court fight with the FCC.
Lawmakers crafting the new laws haven't officially changed anything in the
bankruptcy bill to accommodate interested parties. But they have inserted a
place holder in the bill in anticipation of having legislation designed specifically
to affect the outcome of Nextwave's bankruptcy case.
The administration has been quietly pushing lawmakers to change bankruptcy
laws so the FCC can preempt court procedures and reclaim wireless licenses
from Hawthorne, N.Y.-based Nextwave, which filed for bankruptcy late last
year.
Under current laws, the FCC is treated like any another creditor in a
bankruptcy case and is subject to what is called an "automatic stay." That
stops creditors from pursuing claims against those in bankruptcy and would
normally allow Nextwave to keep its licenses as long as it works out a
payment schedule with the bankruptcy judge, several bankruptcy attorneys
and law professors said.
The FCC has argued that, as a regulator, it should be able to reclaim the
licenses once Nextwave began to fall behind on its payments, even if it filed
for bankruptcy and offered to make good on past delinquencies.
The licenses, bought at a 1996 auction for $4.7 billion, are now estimated to
be worth upward of $10 billion.
Any number of wireless providers, including SBC Communications Inc.
(SBC) and Nextel Communications are waiting to snap up NextWave's
near-national network of wireless licenses should the FCC re-auction them.
Nextwave's licenses have been targeted in the past by congressional
budgeters, looking to pad the U.S. Treasury's coffers by reselling the
spectrum at a higher price. But this is the first time the bankruptcy bill has
been singled out as to accomplish that task.
But now, the FCC has recruited the White House and the Justice Department
to help reclaim the licenses.
Jacob Lew, director of the Executive Office of the President, sent over a
letter to lawmakers May 12 that never mentioned Nextwave by name. But it
did emphasize the administration's strong opposition to changes in bankruptcy
law that would affect the policing powers of federal regulators.
Nextel, who has expressed a strong interest in buying Nextwave's licenses,
recently obtained the services of podesta.com to represent them on the issue,
according to federal lobby disclosure records. The lobby firm's chairman,
Anthony Podesta, is the brother of White House Chief of Staff John Podesta.
Nextwave Isn't Without Its Own Friends.
A network of silent Nextwave investors, called Bay Harbor Management,
also recently hired Barbour's Pennsylvania Avenue lobby firm to act on
Nextwave's behalf.
Barbour, in fact, is so plugged in that he was the included in a bankruptcy
meeting earlier this week with all the top Republican brass in the House and
Senate as well as the principles involved in bankruptcy negotiations, a
Republican aide said.
In addition, House lawmakers key to bankruptcy negotiations are resolute in
opposing the FCC.
House Judiciary Chairman Henry Hyde, R-Ill., and Ranking Democrat John
Conyers of Michigan joined House bankruptcy bill sponsor Rep. George
Gekas, R-Pa., and Rep. Jerrold Nadler, D-N.Y. sent the White House a
bipartisan letter last week expressing their distaste for what the FCC is trying
to do.
Many involved in the bankruptcy bill say they think the issue will go away.
"It isn't talked about much. I'm not saying it isn't talked about. It just isn't
talked about in the circles I'm in," bill architect Charles Grassley, R-Iowa, told
Dow Jones Newswires.
Other Nextwave investors, including Qualcomm and Lucent Technologies
Inc. (LU), want Nextwave to keep its licenses and have also been seen in the
halls of Congress lobbying on this issue, said a Democratic aide familiar with
the issue.
Republican leaders scheduled a meeting Thursday evening to try to iron out
the rest of their differences on the bankruptcy bill. |
