January 13, 2000
FCC Revokes NextWave's Wireless Licenses
The Federal Communications Commission (FCC) told a bankruptcy
court yesterday that the wireless licenses held by bankrupt NextWave
Telecom had automatically been cancelled, per FCC rules, and that it
will seek new bidders for the licenses, which are worth billions of
dollars, in July, according to the Associated Press. Citing a decision
from an appeals court that confirmed the FCC's authority over the
licenses, FCC Chairman Bill Kennard said the agency's rules dictate such
licenses cancel when their holder fails to pay for them on time.
Hawthorne, N.Y.-based NextWave won the licenses at issue in a federal
auction several years ago to use for wireless communications known as
PCS. The company failed to raise the money to pay for its $4.7 million
bid, and along with other top bidders in that auction, ultimately filed
for chapter 11 protection. Last year a bankruptcy court in New York
ruled that the company could keep the licenses after paying only a
portion of the amount they bid, but the U.S. Court of Appeals for the
Second Circuit reversed that decision in the fall. In light of that
ruling, the FCC filed its petition with the Bankruptcy Court for the
Southern District of New York, and stated that the licenses had been
cancelled, and therefore, any attempts by NextWave to reorganize itself
should not be approved. This is despite the fact that a group of
investors agreed in December to provide $1.6 billion in cash to help
NextWave emerge from bankruptcy and build a wireless network. The
Cellular Telecommunications Industry Association called the FCC's action
'pro-competition and pro-consumer,' and Sen. Judd Gregg (R-N.H.), who
pushed for legislative remedies to enable the FCC to act against
companies that cannot pay for their licenses, said, 'The taxpayers will
be better off because they will be paid in full for a commodity that has
tremendous value in the commercial marketplace.'
Denny's Franchisee Owner Files for Bankruptcy Protection
Olajuwon Holdings Inc., one of the largest franchisees of
Denny's restaurants, has filed for bankruptcy protection, according to
The Houston Chronicle. Owned by Akinola Olajuwon, brother of
Houston Rocket star Hakeem Olajuwon, the company filed because of a
dispute involving ownership of 71 Denny's restaurants in 12 states.
Olajuwon filed a suit in December that contended Phoenix Restaurant
Group of Scottsdale, Ariz., was trying to defraud him out of 71
franchises he bought from it. A hearing had been scheduled for last
Friday to determine whether Phoenix Restaurant should be temporarily
restrained from taking any action against Olajuwon, but his attorney
said he decided to file for bankruptcy instead and then pursue damages
against Phoenix Restaurant. Olajuwon plans to keep 60 of the disputed
restaurants open under a restructuring plan to pay off the company's
debt. According to Olajuwon, Phoenix sold him the franchises for $29
million with the promise that each restaurant was in good condition.
Olajuwon discovered after the transaction that 14 of the restaurants
could not be operated without extensive repairs and that some, including
one in Houston, had been closed and abandoned. Olajuwon was temporarily
delinquent on $150,000 in rent payments because his cash flow was lower
than he had planned, but his attorney said he paid the full amount in
December. Phoenix Restaurant maintains that it has the right to take
back all of the restaurants because of the late rent payments and to
keep the initial $29 million payment. Phoenix Restaurant has retained
Diana Woodman of the Houston office of Thompson &
Knight, and U.S. Bank National Association,the principal secured lender,
has hired Gregory G. Hesse of Jenkens & Gilchrist,
Dallas.
Viacom and Warner Bros. to Acquire Assets of WestStar
Cinemas
Viacom Inc. and Warner Bros., through an affiliated partnership
in WF Cinema Holdings L.P., have entered into an agreement to acquire
the assets of WestStar Cinemas, which is operating under chapter 11
protection, according to a newswire report. The bankruptcy court
approved the transaction yesterday. WestStar Cinemas owns and operates
54 theatres with 357 screens under the names of Mann Theatres in
Southern California, including the famous Chinese Theatre in Hollywood,
Arizona and Colorado, and the Bruin, National and Village Theatres in
Westwood Village, and Festival Cinemas in Northern California and
Alaska.
Court Approves TriTeal Liquidation
TriTeal Corp., Carlsbad, Calif., announced yesterday that on
Dec. 7 the Bankruptcy Court for the Southern District of California
approved its liquidation plan in connection with its voluntary chapter
11 petition, according to a newswire report. The company filed its
liquidation plan in August. The company has ceased doing business.
Jeffrey A. Davis of Gray Cary Ware & Freidenrich is
the company's bankruptcy attorney.
Court Extends Exclusivity Period for Costilla Energy
Costilla Energy Inc. announced yesterday that its exclusivity
period to file a chapter 11 plan has been extended until Feb. 11, per
its request, according to a newswire report. Costilla is an independent
oil and gas company with operations primarily in the Gulf Coast region
of South Texas and the Permian Basin of West Texas and Southeastern New
Mexico.
Women Opposed to Dow Corning Settlement May Sue Corporate
Parents
Bankruptcy Judge Arthur J. Spector (E.D.
Mich.) this week threw out a challenge to an earlier ruling that opened
the door to suits against Dow Chemical Co. and Corning Inc., the parent
companies of Dow Corning Co., according to the Associated Press. Women
opposed to a billion-dollar settlement over silicone gel breast implants
made by Dow Corning at one time now can sue the corporate parents. After
more than four years of negotiations, Judge Spector approved the
settlement in November, which calls for Dow Corning to pay $3.2 billion
to settle claims by more than 170,000 women. In late December, he issued
a ruling that women who voted against the plan could sue the parent
companies if they chose. Dow Chemical and Corning challenged the ruling,
but in an opinion dated Monday, Judge Spector said the challenge wrongly
assumed that it changed the terms of the settlement. Attorneys for the
parent companies had argued that the December ruling violated the ban on
future lawsuits against them and said they did not consider the
settlement confirmed.
Harnischfeger Announces Results of Jan. 10-11 Auction of
Assets
Harnischfeger Industries Inc., Milwaukee, announced yesterday
the results of its Jan. 10-11 auction for the assets of its subsidiary,
Beloit Corp. Both companies filed chapter 11 last June. The winning bids
are: Groupe Laperriere & Verreault Inc. for the Pulp and Finishing
Divisions, RCI Acquisition Inc. for the Woodyard Division, Valmet Corp.
for the Paper Aftermarket and Roll Covers Division, and Mitsubishi Heavy
Industries Inc. for Paper Technology. A hearing to approve the bids is
scheduled for next Wednesday.
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