quote the license shall be automatically cancelled pursuant to forty seventh's to your far section one point two one one zero that's the automatic cancellation regulation that the that the f c c applied in this particular case very broad a certain all of the cases that the f c c cites on that issue and pages twenty eight twenty nine of its brief all but one of those cases involve disputes between private parties and none of them article nine cases and i don't think they're like so to for sorry about that that the the issue of whether those proceeds does not depend on whether the original collateral continues to exist proceeds as turns on traceability or substitution that's the standard and there are many cases which we s which hold that even after the original collateral this is destroyed or terminated proceeds can still come about in the two cases that are most on point are the s r j and metro motors cases from bankruptcy courts both of which concern the proceeds of terminated our exclusive franchises in those cases the franchises were terminated in order that new franchises could be issued to somebody else in a payment was made in connection with that and the courts in those cases held th proceeds of the terminated franchises because they could be traced back to them and the terminate you could have disposition of collateral by terminations there's other cases that involve impairment or destruction of collateral where there's insurance proceeds and in this court's own decision in the m l cupid case which was the case that held that private lenders could take security interest in the proceeds of collateral the court actually very carefully went through  and analyzed what the nature of that security interest is and it was an interest in it and in coal it right to proceeds that attach even before the war proceeds and that's what i would suggest that the debtor still had here even though the license was cancelled when the automatic stay was lifted because the bankruptcy court lifted the stay specifically under those provisions of the bankruptcy code that a lot of the automatic state of the lifted to allow a secured creditors to foreclose on its collateral and bankruptcy court claim and were opposed to reconsideration and the reality is that the f c c very vigorously opposed reconsideration and they flew lawyers out from washington d c to attend the hearing and say that the claims shouldn't be reconsider that they do need to still need to be approved but it is used approved by the f c c if the new license see the transfer is inappropriate transferee in effect the f c c has recently adopted new regulations to make that even easier for the whole owed that could happen if you couldn't do that here well you couldn't do it at the point because of the fluctuation in the market the license at that point didn't have enough value but that's something that happens with other types of tan forced to be transferred in money had come in the banks would only gotten paid off the amount that it was old not the brought the surplus would have gone to the debtor that's what happens all the time in these transactions and all we're saying is the f c c only had an interest in getting the forty million around that restriction by essentially saying no good deed goes unpunished the f c c here in formulating the structure of the competitive bidding process the options that congress authorized in section three  every other licensee in broadcast in wireless and in every circumstance satellite must pay cash on the barrelhead one hundred percent before getting the licenses issued on  are later cancelled whether automatically or otherwise and very mind there are automatic cancellation provisions always have them since long before the auction process was authorized by congress and there is no right to any enormous the disadvantage suffered by the citizens and taxpayers the united states since they seek to recover from the treasury by giving benefit to small businesses in designated enemies now that has no roots in equity and equity is the source of the bankruptcy court already here f u d is what the f c c exercised in its kennedy letter in explaining that there was no right to judge could i think your questions reflected these were quite different licenses that were auctioned in what's called auction thirty five a couple of years later they were different in a number of key ways as the bankruptcy court  itself noted they were different first because they encompass different time periods they had a new build out date which was substantially later and after all there was no effort to build out a wireless telecommunications system by mega com they were different as well because they're the rules for designated entities the rules for financing by other than small businesses were changed significantly allowing them to just spacing of companies that could not  participated in the auctions that the that this company did on the licenses those changes as well as the fluctuations in the market that you noted just person reflected a very substantial difference nine j competitive bidding authority to take something that was previously issued a license previously issued and seek to resell it which is what their theory is it doesn't have that authority and it didn't exercise their theory security agreement and a security interest in collateral that they're going to extinguish and and then sell something else some some other property can you explain that yesterday the reason is as also explained in the security agreement i think now opposing counsel explain to you that there is a commercial market for the resale of licenses subject of course to regulatory approval by the sick now that means of course as this court recognized in m l q that there's also a commercial market for lending subject to collateral of the kind of collateral that could be achieved in a security agreement on advice and by a private party so the f c c made clear that it would have priority over any other secured lender in the event of a sale principally now that was the reason for doing it posing council now tries to make a great deal more of it and that saying principally that the f c c asserted something more than is a right to use the underlying spectrum that right is subject to terms and conditions some stepped forth in the body of the license but remember the body of the license also incorporates the communications act and the provisions of the the regulations forty seven you see a interest in that being the case the only link that plaintiffs here a service as to traceability is in that underlying spectrum remember these differences i pointed out in the licenses the only that's in the kennedy matter when the f c c in the exercise of its equity and policy authority said that they would not seek double recovery because it wouldn't be equitable the f c c was looking to that similarity of the spectrum but that was permissible because the f c c on behalf of the government owns that spectrum and ten make that claim these private parties cannot they do not own that spectrum they are not authorized to try to make that link and i think that the bankruptcy courts decision disallowing the f c c is on security claim makes that clear the the court there said i'm not going to decide a lot of these extraneous issues i'm not going to decide for example the issue discretionary authority the f c c will not seek double recovery for that reason i'm just wondering the f c c is claim on the terms the f c c itself explain to me now that in no way precludes the bankruptcy court as it later did from saying there are no surplus proceeds because there is no collateral being resold and the bankruptcy court of course is the best judge of its own prior decisions and explains wh to a license this bundle of rights to use the underlying spectrum is advocated by the f c c in the public interest that's what the communications act says and it's done so under competitive bidding now used to be under lotteries before that it was under comparative hearings the congress and yes we see have decided that the best way of judging the public interest is to use market forces competitive bidding to determine the highest and best use of this valuable public property  though the f c c does in an option which it has always done either in virus or imperative hearings or however it seeks to ensure that the public's spectrum will be used in the public interest now when this company magna cum was the winning bidder for these licenses it promised to use the spectrum in the public interest and it never accomplished that he never made any effort to build out a wireless telecommunications system it never offered service to the public and yet they appear today in an effort to twist the u c c and to punish the f c c for its good deeds here and that is not equatable that is not something that this court in the exercise first the d c circuit's opinion is not on the governing long the supreme court's opinion on search or are you from that is plaintiff here tries to make a great deal of one enforcement under the automatic stay the d c circuit said the second circuit didn't really reach that well that's not true first of all the second circuit did because the second circuit recognized the difference between regulatory cancellation on the one hand and commercial creditor status on the other that's all water under the bridge doesn't matter because the thing that matters is that supreme court didn't reach that question so when the d c circuit said as an alternative reason for concluding that five twenty five applied they said well three sixty two a four and five also apply so we think that the f c c is argument which sort of link the regulatory police exception under three six two b t let me turn for a moment though to why that wouldn't matter here at all and that is that with the consent of the debtor itself the bankruptcy court lifted three sixty two is automatic stay provisions here to the extent necessary and i think in his opening argument opposing counsel has misstated the holding of that lip state order the bankruptcy court in the list state order simply said that it was lifting the automatic stay to the extent necessary and in the later opinions explained that it did not reach the question first whether cancellation have already taken place second whether cancellation was otherwise authorized coordinates later and those were correct and should be about the last point i'd like to make is that nothing in the next wave nothing in the security agreement precludes the f c c the role as a regulator that's his historic role under the communications act after all and that's what the bankruptcy court in the district court in this case recognized from a regulatory matter into a financial or commercial not so by describing the operation of the automatic cancellation rule in the event of nonpayment the security agreement has not affected c is regulatory authority nor could it be a c c would have to have intended something much more substantial in a private contract that could not accomplish what opposing counsel now  key part of that sentence which says about recision and even to commission since councils are revoke the license for any default under this agreement he stops there or any other violation of the advantage to make sure that it primed other creditors and our point is just when you take on the on the rights of a secure creditor you are subject to the obligations under kimble foods and article nine and one of those obligations is the server pain the surplus proceeds over if you're concerned about equity i believe that the rule that's been adopted by all fifty states and uniformly by courts throughout the history of secure transactions shows what's ethical here which is that once the f c c was paid in full the forty eight million dollars it has no further interest in this money it should go back to the debtor it's not a punishment to the f c c because it never had a claim to more than the forty eight million dollars i had been able to pay the forty eight million dollars there hadn't been a brief that market downturn he could have transferred to licenses later and never been no more money would have ever gone to the f c c it's not a so that's the first point i'd like to make c actually said is forgiveness is discretionary and we will only exercise of discretion here in exchange for magna cum waving all claims against the f c c then we will subordinate not actually forgive but born ate our our claim to other creditors and that's what the bankruptcy court rejected it rejected the proposed settlement because the claim had no value because it had been satisfied by the debt by the reaction as the proceeds of making the consolation system and then the narrow issue of the