FCC v. NextWave Personal Communications Inc., 537 U.S. 293 (2003)

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INC. et al.

certiorari to the united states court of appeals for the district of columbia circuit

No. 01-653. Argued October 8, 2002—Decided January 27, 2003*

Pursuant to provisions of the Communications Act of 1934 authorizing the

Federal Communications Commission (FCC) to award spectrum licenses to small businesses through competitive bidding, and to allow them to pay for the licenses in installments, the FCC auctioned off certain broadband personal communications services licenses to respondents (hereinafter NextWave). NextWave made a down payment on the purchase price, signed promissory notes for the balance, and executed agreements giving the FCC a first lien on, and security interest in, NextWave's rights and interest in the licenses, which recited that they were conditioned upon the full and timely payment of all monies due the FCC, and that failure to comply with this condition would result in their automatic cancellation. NextWave eventually filed for Chapter 11 bankruptcy protection and suspended payments to all creditors, including the FCC, pending confirmation of its reorganization plan. The FCC objected to the plan, asserting that NextWave's licenses had been canceled automatically when the company missed its first payment deadline, and announced that NextWave's licenses were available for auction. The Bankruptcy Court invalidated the cancellation of the licenses as a violation of various Bankruptcy Code provisions, but the Second Circuit reversed, holding that exclusive jurisdiction to review the FCC's regulatory action lay in the courts of appeals. After the FCC denied Next-Wave's petition for reconsideration of the license cancellation, the District of Columbia Circuit held that the cancellation violated 11 U. S. C. 525(a), which provides: "[A] governmental unit may not . . . revoke . . . a license . . . to . . . a debtor . . . solely because such . . . debtor . . . has not paid a debt that is dischargeable in the case."

Held: Section 525 prohibits the FCC from revoking licenses held by a bankruptcy debtor upon the debtor's failure to make timely payments to the FCC for purchase of the licenses. It is undisputed that the FCC

*Together with No. 01-657, Arctic Slope Regional Corp. et al. v. Next-Wave Personal Communications Inc. et al., also on certiorari to the same court.


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