Opinion ID: 152242
Heading Depth: 1
Heading Rank: 3

Heading: NextWave, the Stipulation, and the 2006 Bankruptcy

Text: After the bankruptcy court confirmed the 2000 Plan, the Supreme Court ruled in Federal Communications Commission v. NextWave Personal Communications, Inc., 537 U.S. 293, 123 S.Ct. 832, 154 L.Ed.2d 863 (2003), that the FCC's automatic license revocation rule violated 11 U.S.C. § 525. Section 525 says that agencies may not    revoke    a license    [issued to] a debtor under this title    solely because the debtor has not paid a debt that is dischargeable in bankruptcy. The Supreme Court held that the FCC's license revocation rule violated Section 525 and therefore was an invalid exercise of authority under the Administrative Procedures Act. 537 U.S. at 300-02, 123 S.Ct. 832; 5 U.S.C. § 706(2)(A). After NextWave came down, the FCC denied as moot Airadigm's petition to have the licenses reinstated. [B]ecause Airadigm was under the protection of Chapter 11 of the U.S. Bankruptcy Code, the Commission's automatic cancellation rule was ineffective. In re Airadigm Communications, Inc., 18 F.C.C.R. 16296, 16299 (F.C.C. 2003). The legal effect of the FCC's ruling was not just to restore the licenses, but to declare that Airadigm always had the licenses. As a practical matter, the FCC acknowledges that the ruling had the effect of restoring the licenses. But by the time that the FCC's 2003 ruling came around, TDS was no longer obligated under the 2000 Plan to fund the loans that were to pay creditors. In other words, even though the 2000 Plan would have paid the claims of OEDA and Ericsson that are discussed above, and even though the 2000 Plan made the claims enforceable after the Plan was confirmed (2000 Plan § 12.6), the funding to pay the claims had dried up. In May 2006, Airadigm filed a new Chapter 11 bankruptcy petition. It also filed a motion for a final decree closing the 1999 bankruptcy. See Fed. R. Bankr.P. 3022. The FCC objected to closing the 1999 bankruptcy and argued instead that the parties should discuss modifications to the 2000 Plan, apparently pursuant to 11 U.S.C. § 1127(b), which gives the proponent of a plan and the bankruptcy court authority to modify a plan post-confirmation if circumstances warrant such modification. The parties settled the dispute over whether to allow a new bankruptcy to proceed by entering into a Stipulation. As originally drafted it had five operative paragraphs, four of which matter and are set out below: 1. Except as otherwise specifically set forth in this Stipulation, all of the rights of Airadigm as debtor, and the FCC and TDS as creditors, under the 2000 Plan, including their respective rights as holders of the Allowed Claims they hold pursuant to the 2000 Plan (including the rights of TDS as assignee of certain Allowed Claims), are in no way prejudiced by closing the 1999 Bankruptcy Case and proceeding with the 2006 Bankruptcy Case. 2. The FCC's Allowed Claim in the 1999 Bankruptcy Case shall be allowed in the 2006 Bankruptcy Case. The claims of TDS as assignee of the Allowed Claims of Ericsson, Inc. and Oneida Enterprise Development Authority in the 1999 Bankruptcy Case shall be allowed in the 2006 Bankruptcy Case. In addition, the claims of TDS arising from its advances of funds in accordance with the 2000 Plan shall be allowed in the 2006 Bankruptcy Case in the amount of such loans with interest to the extent provided in the 2000 Plan. 3. In reliance on these Stipulations, (a) the FCC does not object to the closing of the 1999 Bankruptcy Case and will withdraw its Objection to the Motion, and (b) the FCC waives any right it may have to dispute Airadigm's right to commence the 2006 Bankruptcy Case, with prejudice. 4. All other rights of the parties hereto (including, without limitation, the right of the FCC and TDS to seek the inclusion and allowance of interest on their Allowed Claims (including assigned Allowed Claims) in the 2006 Bankruptcy Case) are expressly reserved.    When the Stipulation was entered, in June 2006, counsel for TDS, Airadigm, and the FCC sought to clarify its meaning on the record. In doing so, the parties made the Stipulation more difficult to interpret. The comments to the bankruptcy court by counsel for TDS were representative: [T]here is an unresolved issue as to the right to claim interest accrued on [the claims from the 2000 case]. And there are also, as not referenced in the stipulation, open questions with respect to the nature or extent of security for various claims. As to those two unresolved issues, the parties do not intend by this stipulation to waive a right as might be appropriate or as might be authorized under the code or the rules to pursue disputes, should they choose to do so in the future. With that clarification, we believe the stipulation resolves the objection of the FCC   . The FCC's lawyer spoke briefly, but in similarly broad and opaque terms. Counsel emphasized that while the FCC was waiving its objection to closing the 1999 bankruptcy case, the Stipulation was not intended to speak to substantive arguments between the parties that the FCC had made elsewhere. The FCC has not identified for us precisely where that elsewhere is, however, nor has it contended that the unidentified substantive arguments included the argument that it presses on appeal. The bankruptcy judge gave the parties an opportunity to ensure that something more coherent was placed in the record: Once again, you're all welcome to write down what you mean here if you want    I'm not exactly sure why you don't write down what you mean, but if you want this entered as it is with the modifications on the record, that's fine with me. It was fine with TDS and the FCC, too. With that, the bankruptcy judge approved the Stipulation as modified and later entered an order that allowed the 2006 bankruptcy to proceed. The parties are here now because TDS filed three claims in the 2006 bankruptcy, and the FCC objected. [4] Claim 14 was based on the Confirmation Loan, the Working Capital Loan, and the Construction Loan that was contained in the 2000 Plan. Claim 15 was based on the OEDA claim from the 1999 bankruptcy. Claim 16 was based on the Ericsson claim from the 1999 bankruptcy. The bankruptcy court overruled the FCC's objections to Claims 14 and 16; the bankruptcy court sustained the objection to Claim 15 and disallowed the claim. The district court affirmed with respect to Claims 14 and 16, but reversed with respect to Claim 15. We think that the bankruptcy court reached the correct result, although we rest our decision on grounds that are different from those set out in the bankruptcy court's opinions.