January 14, 2000
NextWave Will Fight FCC for PCS Licenses
NextWave Telecom Inc., Hawthorne, N.Y., yesterday said it would
fight the Federal Communications Commission (FCC) in court in order to
retain valuable wireless licenses it holds, according to Reuters. On
Wednesday the FCC announced that it had revoked the licenses because
NextWave was unable to pay for them. NextWave filed for chapter 11
protection in 1998 after it was unable to raise the money for its $4.8
billion bid for the licenses, and last month, the company announced it
had a group of investors who would provide $1.6 billion to help the
company emerge from bankruptcy and establish a wireless network. In a
statement, NextWave said the FCC's actions are 'null and void under the
bankruptcy laws' and that 'The FCC's efforts to block the
commercialization of NextWave's licenses and its election to pursue
unlawful action to punish NextWave...are at odds with federal law and
the commission's own statements.' The company went on to say that the
FCC's action this week '...will inevitably lead to lengthy delays...and
will entail further rounds of time-consuming litigation.' NextWave said
it has done everything in its power to avert further litigation with the
FCC and place its licenses into productive use immediately. Nextel
Communications Inc., Reston, Va., has sought to acquire the licenses,
and at one point said it would pay more than $8 billion for the
licenses. Nextel withdrew the offer after the FCC's plans became
clear.
Credit Bureaus to Pay $2.5 Million to Settle FTC Suit
The three leading credit bureaus in the United States will pay
$2.5 million to settle Federal Trade Commission (FTC) charges that it is
too hard for consumers to contact them, The Wall Street Journal
reported. The FTC had alleged that Equifax Credit Information Services
Inc., Experian Inc. and Trans Union LLC have intentionally blocked
millions of phone calls from consumers since 1997 and caused other
callers to wait excessive amounts of time on hold. Equifax and Experian
deny they failed to live up to a 1996 law requiring them to be
responsive to consumers but said they would upgrade their customer
service. Experian and Trans Union each agreed to pay $1 million, and
Equifax will pay $500,000.
Fruit of the Loom Petitions to bring Further Bankruptcy to
Cayman Islands
Fruit of the Loom Ltd., which moved to the Cayman Islands last
year, has filed a petition in the Caymans to bring a further bankruptcy
application, according to Reuters. The company which had been based in
Chicago for years, filed for bankruptcy protection in December after
hurriedly shifting much of its production out of the United States. The
new bankruptcy petition in the Grand Court of the British overseas
territory was filed on Dec. 20, and if approved, would allow the company
to wind up its affairs largely in public. Unlike the U.S. bankruptcy
system, assets and liabilities of a company being 'wound up' or
liquidated are not in the public record under the Cayman Islands
bankruptcy law. In the U.S. filing, the company listed $2.4 billion in
liabilities, at least $60 million more than its assets. A hearing has
not been scheduled yet to hear the Caymans application to liquidate, and
offices of the company in the Caymans were closed and phone calls
diverted to an El Salvador plant--one of 60 facilities where Fruit of
the Loom employs about 40,000 people worldwide.
Court Awards DeLorean's Estate to Golf Course Developer
U.S. District Judge Garrett Brown this week approved the sale
of John DeLorean's 434-acre Bedminster, N.J., estate to a golf course
developer and ordered the famed auto maker off of the property by the
end of March, according to the Associated Press. The judge approved the
sale to National Fairways Inc. for $15.25 million. DeLorean, famous for
the 8,500 stainless steel DeLorean Motor Co. cars he built in the early
1980s, filed for bankruptcy protection in September and vowed to pull
himself out of financial trouble. He also said that he himself would
develop a golf resort and equestrian center on his property, which he
estimated to be worth about $27 million. The proceeds of the sale of the
estate will go to creditors, but the amount is still about $15 million
short of the amount owed to them. Merrill Lynch Credit Corp., DeLorean's
largest creditor, won title to the Georgian mansion and the rest of the
estate last March.
SG Cowen Securities Cuts Rating on Omega Healthcare
SG Cowen Securities said Thursday that one of its analysts had
downgraded Omega Healthcare Investors Inc. (OHI) to a rating of
'neutral' from 'buy' because of concerns about tenants and bank
refinancing, according to a newswire report. Cowen said bankruptcy
filings for one or more nursing homes may result in revision in lease
terms for OHI, that OHI will need to renew its bank credit agreements
this year in 'a difficult financing environment' and that a likely
downward revision of the company's earnings outlook increased the
possibility that OHI may reduce its common stock dividend in the coming
months.
Just For Feet Same-Store Sales Down in Third Quarter
Athletic footwear retailer Just For Feet Inc. announced that
same-store sales for the third quarter fell 4.7 percent over the same
quarter last year, according to a newswire report. The Birmingham, Ala.,
company said same-store sales in its superstore division dropped 3.2
percent for the third quarter and same-store sales in the specialty
store division dropped 14.6 percent. Just For Feet filed chapter 11 in
early November, and a month later Deloitte & Touche LLP resigned as
the company's independent auditors. Just For Feet is continuing its
search for a new auditing firm and expects to make major adjustments to
its financial statements, which will have a significant negative impact
on third-quarter operating results.
UStel Completes Sales of Assets to Unity Communications
UStel Inc. announced that it has completed the sale of its
cellular retail telecommunications assets to Unity Communications Inc.
for about $1.9 million in cash, according to a newswire report. The sale
of the assets completes UStel's efforts to sell operating assets subject
to chapter 11 protection. All proceeds of the sale will be applied
toward partial payment of a term loan, revolving credit facility,
equipment loan and debtor-in-possession loan from UStel's secured
lenders, Goldman Sachs Credit Partners L.P. and Coast Business
Credit.
U.S. Attorney Recovers $101 Million in Damages, Fines and
Penalties in 1999
U.S. Attorney Donald K. Stern, Boston, announced yesterday that
his office recovered more than $101 million during fiscal year 1999 in
damages, fines and penalties from businesses and individuals that
violated federal law. The largest recovery involved $60 million
recovered from a wholly owned subsidiary of Sears Roebuck & Co. to
satisfy a criminal fine; a federal court had imposed the fine after
Sears plead guilty to one count of bankruptcy fraud for implementing a
nationwide scheme to defraud individuals who sought bankruptcy
protection. The majority of the rest of the monies recovered are related
to civil health care matters.
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