FiberTower Network Services Corp. v. Federal Communications Commission ( In re FiberTower Network Services Corp.)FiberTower Network Services Corp. v. Federal Communications Commission ( In re FiberTower Network Services Corp.)
MEMORANDUM OPINION
Before the court is Debtors’ Emergency Motion (I) To Enforce Automatic Stay Against the Federal Communications Commission or, In the Alternative, (II) For Injunctive Relief Barring the Actual Cancellation of the Debtors’ Spectrum Licenses Until Such Time As a Final, Non-Appealable Order Has Been Entered In Respect of Cancellation of the Licenses (the “Motion”) at docket no. 2,
The court exercises core jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(A). This memorandum opinion constitutes the court’s findings of fact and conclusions of law. Fed. R. Bankr.P. 7052.
A. Debtors’ Capital Structure and Bankruptcy
Debtors are in the business of providing facilities-based backhaul services, principally to wireless carriers, as well as millimeter-band spectrum services. Petition Declaration ¶ 5. Backhaul is defined as the transport of voice, video, and data traffic from a wireless carrier’s mobile base station, or cell site, to its mobile switching center or other exchange point. Id. Debtors provide spectrum leasing services directly to other carriers and enterprise clients, and additionally offer their spectrum services through spectrum brokerage agreements and fixed wireless equipment partners. Id. Debtors have customer service agreements with major U.S. wireless carriers, including AT & T, Verizon Wireless, T-Mobile, Sprint, and MetroPCS. Id. ¶ 8. Debtors also hold national-scope service agreements with Verizon Business and CenturyLink, which allow Debtors to provide fixed wireless government-grade transport services. Id.
Debtors’ capital structure consists of secured debt, unsecured debt, and equity. Id. ¶10. On November 9, 2006, FTWR issued $402.5 million of 9% Senior Secured Convertible Notes due 2012 (the “2012 Notes”), which were jointly and severally guaranteed by each of the other Debtors and by certain non-debtor affiliates.
Debtors underwent a restructuring on December 22, 2009 (the “2009 Restructuring”) to reduce their total outstanding debt. Id. ¶ 11. Through the 2009 Restructuring, Debtors redeemed $266,791,438 in principal amount of the 2012 Notes, amounting to roughly 90.8% of the outstanding notes. Id. Each $1,000 in principal amount of the 2012 Notes was redeemed for $47.65 cash, 114.616 shares of common stock, and $425.46 in principal amount of 9.00% Senior Secured Notes due 2016 issued by FTWR (the “2016 Notes”). Id. The 2016 Notes are jointly and severally guaranteed on a senior basis by each Debtor and by non-debtor affiliates.
As of the 2009 Restructuring, holders of the 2012 Notes (the “2012 Noteholders”) and holders of the 2016 Notes (the “2016 Noteholders”), along with their respective indenture trustees, entered into an Amended and Restated Interereditor Agreement (the “Interereditor Agreement”). Id. ¶ 15. Under the Interereditor Agreement, the 2012 Notes are subject to and subordinate in priority to the 2016 Notes. Id. The 2012 Noteholders also con
Beginning in 2011, Debtors experienced a series of adverse economic events that impacted Debtors’ revenue and ability to raise capital. See id. ¶¶ 19-22. According to Debtors, their liabilities currently outweigh their assets. See id. ¶ 9. Pursuant to negotiations with an ad hoc committee of the 2016 Noteholders, Debtors formulated a proposed plan of reorganization (the “Proposed Plan”),
B. The Spectrum Portfolio and the Commission’s Regulatory Regime
At issue in the above-captioned adversary proceeding is Debtors’ national spectrum portfolio (the “Spectrum Portfolio”) of 24 GHz and 39 GHz wide-area spectrum licenses (collectively, the “Licenses”). Petition Declaration ¶¶ 6-7, 38. The Spectrum Portfolio extends over substantially all the continental United States, covering areas with a total population of over 300 million. Id. ¶ 6. Debtors lease portions of this spectrum to various customers. Id.
The Licenses are issued and regulated by the Commission pursuant to its authority to allocate the electromagnetic spectrum and regulate wireless communications used in interstate and foreign commerce under 47 U.S.C. §§ 151 et seq. (the “Communications Act”). In accordance with the Commission’s regulations, “[e]ach licensee must make a showing of ‘substantial service’ within ten years of its license grant” as a condition precedent to license renewal (alternatively, “Substantial Service,” “Substantial Service Showing,” or “Substantial Service Standard,” as appropriate). 47 C.F.R. § 101.527(a). The regulations define Substantial Service as “service which is sound, favorable, and substantially above a level of mediocre service which just might minimally warrant renewal during its past license term.” Id. While the Commission has identified safe harbors by satisfaction of which licensees may ensure that they satisfy the Substantial Service Standard (“Safe Harbors”), compliance with the Safe Harbors is not a necessary condition to license renewal; the Commission evaluates licensees’ compliance with the Substantial Service Standard on a
Wide-spectrum licenses “in general remain valid until terminated in accordance with” Commission regulations. 47 C.F.R. § 1.955(a). “Authorizations automatically terminate, without specific Commission action,” if the license expiration date passes before the licenseholder files a timely application for renewal, or “if the licensee fails to meet applicable construction or coverage requirements.” Id. § 1.955(a)(1). A licensee’s failure to satisfy the Substantial Service Standard results in termination of the licenses. Id. § 1.955(b).
“Any person aggrieved by any action taken pursuant to” authority delegated by the Commission “may file an application requesting review of that action by” the full Commission. Id. § 1.115(a). “In the event the Commission orders further proceedings, it may stay the effect of the order from which review is sought.” Id. § 1.115(h)(2); see also id. § 1.102. “The filing of an application for review shall be a condition precedent to judicial review of any action taken pursuant to delegated authority.” Id. § 1.115(k). Following a final action by the full Commission, a licensee may file a petition requesting reconsideration of the final Commission action. Id. § 1.106. “[U]pon good cause shown, the Commission will stay the effectiveness of its order or requirement pending a decision on the petition for reconsideration.” Id. § 1.106(n). Appeals may then be taken “from decisions and orders of the Commission to the United States Court of Appeals for the District of Columbia” (the “D.C. Circuit”). 47 U.S.C. § 402(b). Once a licensee files a notice of appeal to the D.C. Circuit, that court has the power “to grant such temporary relief’ to stay the effect of the Commission’s decision
as it may deem just and proper. Orders granting temporary relief may be either affirmative or negative in their scope and application so as to permit either the maintenance of the status quo ... or the restoration of a position or status terminated or adversely affected by the order appealed from.
Id. § 402(c).
The Commission initially granted the Licenses to Debtors around 1998.
On and before June 1, 2012, Debtors filed individualized showings for each License with the Commission, arguing that although nearly all the Licenses do not fall within the Safe Harbor, they nonetheless comply with the Substantial Service Standard. Petition Declaration ¶¶ 33, 35; TR (Van Wagenen) at 52-53.
C. The Cash Collateral Order
On August 21, 2012, the court entered its Final Order (I) Authorizing Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code and (II) Providing Adequate Protection to Secured Parties Pursuant to Sections 361, 362, and 363 of the Bankruptcy Code (the “Cash Collateral Order”).
D. Defendant Allegedly Threatens to Cancel Debtors’ Licenses
On August 20, 2012, Debtors received word that Defendant was likely to terminate a large portion of the Licenses for failure to satisfy the Safe Harbor by the June 1, 2012 deadline. Complaint Declaration ¶ 3; see also TR (Van Wagenen) at 61. By the terms of the Cash Collateral Order and the Plan Support Agreement, this would eliminate Debtors’ financing in chapter 11. See Plan Support Agreement § 7.1(a)(vi); Cash Collateral Order § 4; Complaint Declaration ¶ 4. This, Debtors argue, would in turn completely derail
Defendant opposes the Motion, citing the need to preserve its congressionally-mandated authority to regulate the telecommunications industry. Moreover, Defendant maintains that the Licenses may have already terminated automatically as of June 1, 2012 by virtue of Debtors’ failure to satisfy the Safe Harbor/Substantial Service Standard.
II. DISCUSSION
A. Whatever Rights Debtors Have in the Licenses are Part of the Bankruptcy Estate
Whether or not the Licenses terminated on June 1, 2012,
If the Licenses have not been terminated, then it is clear they are part of the estate. The Code defines the estate to include “all legal or equitable interests of the debtor in property as of the commencement of the case,” save for exceptions not relevant here. Code § 541(a)(1). Courts must interpret this definition expansively to effectuate Congress’s intent to encourage reorganizations and protect creditors. E.g., U.S. v. Whiting Pools, Inc.,
Furthermore, as Defendant conceded at the Hearing,
B. Defendant’s Threatened Termination of the Licenses Does Not Violate the Automatic Stay
Debtors argue that if Defendant terminates the Licenses, its action would violate the automatic stay. See Code § 362(a). The filing of a chapter 11 petition “operates as a stay, applicable to all entities,” of certain actions that could otherwise be undertaken against the debtor. Id. In particular, Debtors rely on Code section 362(a)(1), which stays “the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor ...” as well as section 362(a)(3), which stays “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.”
Debtors’ arguments are unavailing. First, it is questionable whether section 362(a)(1) applies. Section 362(a)(1) only stays “the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor” (emphasis added). The record demonstrates that Debtors’ application to Defendant seeking either a waiver of the Commission’s Safe Harbor rules or an extension of time to satisfy the Substantial Service standard was an action brought by, not against, the debt- or. See Petition Declaration ¶32. Thus, insofar as Debtors’ argument relies on Code section 362(a)(1), it fails, even though the result of the proceedings before the Commission could be a determination that the Licenses are terminated.
Secondly, and more importantly, assuming that the threatened terminations fall within the terms of Code section 362(a)(3), filing bankruptcy “does not operate as a stay ... of the commencement or continuation of an action or proceeding by a governmental unit ... to enforce such governmental unit’s or organization’s police and regulatory power.” Code § 362(b)(4) (emphasis added). Although
Notwithstanding that Defendant’s threatened actions are excepted from the automatic stay, the evidence warrants an injunction barring Defendant from cancel-ling and reauctioning the Licenses until a
Code section 105(a) permits the court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of’ the Code. Although section 105(a) does not give the court a blank check to “create substantive rights that are otherwise unavailable under applicable law” or act as “a roving commission to do equity,”
Even though Defendant’s intended actions are excepted from the automatic stay by virtue of Code section 362(b)(4), that does not preclude the court from issuing the injunctive relief requested. A bankruptcy court may utilize section 105 to “enjoin actions that are excepted from the automatic stay ... ‘in exceptional circumstances.’ ” E.g., Mirant Corp. v. Potomac Elec. Power Co. (In re Mirant Corp.),
A movant requesting injunc-tive relief under Code section 105(a) must satisfy the traditional four-part test for an injunction: (1) likelihood that the movant will prevail on the merits; (2) irreparable injury; (3) balance of the equities favoring the movant; and (4) a demonstration that the injunction would serve the public interest. E.g., Commonwealth Oil,
1. Likelihood of Success on the Merits
a. The Relevant Merits Inquiry
The relevant inquiry for the “likelihood of success on the merits” element depends on “the purpose of the requested injunction.” CollieR on BaNkruptoy ¶ 105.03[l][a] (16th ed. 2012). “[T]he likelihood of success argument will track closely the bankruptcy right sought to be vindicated.” Id. There is some confusion regarding what “likelihood of success on the merits” means in a case where, as here, a trustee or debtor in possession seeks only limited injunctive relief. Defendant argues that the court should inquire whether Debtors would be likely to succeed upon review of an adverse ruling by the full Commission or the D.C. Circuit if Defendant were to terminate the Licenses. Debtors appear to agree, but also suggest that the “merits” refer to the
The court concludes that both parties are incorrect. In this case, “[probability of success means that the Debtor[s] [are] likely to succeed in this lawsuit,” i.e., this adversary proceeding, “not that the Debt- or^] [are] likely to overturn” Defendant’s ultimate termination of the Licenses on reconsideration by the full Commission or on appeal to the D.C. Circuit.
Commonwealth Oil,
[t]he inquiry for a preliminary injunction necessarily focuses on the outcome of a later proceeding, at which time the merits of the questions giving rise to the litigation will be decided. [The debtor-in-possession’s] characterization of the ‘merits’ for purposes of the preliminary injunction analysis erroneously substitutes the question before the court at the preliminary injunction hearing for the merits of the case that must be ultimately decided. Id.
Commonwealth Oil is distinguishable. Whereas the debtor-in-possession in Commonwealth Oil “sought an order ‘staying any enforcement or revocation proceeding ’ ” against it, id. at 1181 (first emphasis in original, second emphasis added), Debtors do not ask this court to stay the proceedings before the Commission; rather, they merely ask this court to preserve their right to litigate to a conclusion their entitlement to retain the Licenses. Here, the court acts only to preserve Debtors’ rights from possible impairment should they, following an initial loss, prevail in the review process. In other words, to the extent this court usurps any function the Commission would otherwise perform, it is only the determination that a stay pending appeal is appropriate in this case — a decision necessarily influenced by the landscape of Debtors’ chapter 11 proceedings as well as any expectation of Debtors’ success on appeal. Whether Debtors will ultimately be successful or unsuccessful on appeal is irrelevant to the question of whether this court may stay Defendant from redistributing the Licenses in the interim. The relevant “merits” question in this case is therefore not whether Debtors are likely to prevail on appeal, but rather whether this court is authorized and likely to grant the requested relief. See CollieR on Bankruptcy ¶ 105.03[l][a] (16th ed. 2012) (“In connection with the ‘likelihood’ argument, many courts have looked to the purpose of the requested injunction ... the likelihood of success argument will track closely the bankruptcy right sought to be vindicated.” (emphasis added)).
Nor is the question whether Debtors can show a reasonable likelihood of a successful reorganization. See Vitro, S.A.B. de C.V. v. ACP Master, Ltd. (In re Vitro, S.A.B. de C.V.),
b. Debtors Have Demonstrated Likelihood of Success on the Merits
Debtors have successfully made such a showing. There is ample authority for the proposition that a bankruptcy court may, in the proper circumstances, enjoin a federal administrative agency.
That the bankruptcy court as well as the Commission has (1) an interest in disposition of the Licenses and (2) the jurisdiction and competence to exercise authority respecting that interest is illustrated by other instances where relations between a debtor and a regulatory authority are subject to bankruptcy court oversight. For example, in a bankruptcy proceeding between a regulatory agency and a trustee or debtor, a bankruptcy court may require submission of a proposed compromise or settlement for judicial approval pursuant
Moreover, the Communications Act and the regulations implementing it contemplate that the effect of a Commission decision may be stayed pending reconsideration and appeal of licensing decisions. See 47 C.F.R. §§ 1.102, 1.106(n), 1.115(h)(2); 47 U.S.C. § 402(c). Thus, the court is not being asked to fashion any relief not already contemplated by the applicable statutory and regulatory scheme. As a result, granting the requested injunction would not impermissibly utilize Code section 105(a) to “create substantive rights that are otherwise unavailable under applicable law.” See United States v. Sutton,
Finally, not only have other courts issued similar injunctions in factually analogous circumstances,
This court’s exercise of its jurisdiction to protect Debtors’ rights in the Licenses need not frustrate the Commission’s proceedings. This court does not propose to second-guess the Commission or to supplant it in deciding whether Debtors should retain the Licenses. By restraining Defendant from disposing of the Licenses in derogation of any of Debtors’ rights before the status of those rights is finally decided, this court merely acts to ensure that Debtors do not wrongfully lose property of potentially substantial value to creditors, the protection of which is essential to the reorganization process. In doing so, the court does not tread upon the Commission’s adjudicatory functions or usurp Defendant’s ultimate regulatory authority, such as by ordering it to find that Debtors have satisfied the Substantial Service Standard. See In re FCC,
Therefore, the court may enjoin Defendant from declaring the Licenses terminated pending a final, non-appealable order. The court now turns to the remaining elements required to support injunctive relief to determine whether it should. See Vantage Petroleum,
2. Irreparable Injury
Defendant does not dispute that Debtors will be severely injured if Defendant redistributes the Licenses. The question is whether that injury is sufficiently irreparable to warrant injunctive relief. See Sampson v. Murray,
The record demonstrates that the threatened harm is indeed irreparable. As described above, if the Commission deems the Licenses terminated, Debtors will almost certainly lose access to cash collateral. This danger is not speculative, theoretical, or remote;
Debtors have argued, and Defendant does not dispute, that it would be nearly
Defendant asserts that the harm to Debtors would be reparable because even if the Commission were to terminate and reauction the Licenses, the Commission could reclaim and return the Licenses to Debtors if the full Commission or the D.C. Circuit were to later reverse the initial termination. See TR at 131. However, there is no evidence in the record that would allow the court to find that the Commission could indeed claw back the Licenses, let alone that it could do so expeditiously enough to not seriously disrupt or even destroy Debtors’ business by delay and uncertainty. Defendant presented no evidence at the Hearing regarding how long reclaiming the terminated licenses would take. See TR at 121-22, 130-31. Nor did it present evidence regarding whether good faith purchasers, understandably reluctant to give back their newly bought licenses, could be forced to quickly return the Licenses to the Commission. Id. Returning the Licenses could take years if a substitute licensee chose to resist the Commission. In the interim, Debtors would lack assets critical to their business. Furthermore, even assuming that the Commission could promptly return all of the Licenses to Debtors, the initial termination could still result in Debtors losing the use of cash collateral. It is therefore entirely conceivable that by the time Defendant could recover the Licenses, there would be no extant Debtors to which to return them. The court is therefore satisfied that Debtors have met their burden of persuasion on the issue of irreparable harm.
The potential harm to Debtors if this court does not issue an injunction far outweighs the possible harm to Defendant if injunctive relief issues. As described above, Debtors face the loss of cash collateral, and therefore the potential loss of their business, if Defendant redistributes the Licenses pending appeal. The possible death of Debtors’ businesses is a consequence weightier than any harm a temporary stay could cause Defendant.
In contrast, the only harm Defendant faces and cites to this court is encroachment of its regulatory turf. See TR at 131-37; Objection, supra note 5, at 22-23. Although, in fact, the court’s issuance of a stay merely protects estate property and the reorganization process without infringing on any area of Defendant’s expertise, Defendant’s counsel argued at the Hearing that granting an injunction could conceivably embolden other licensees to pursue similar injunctions against Defendant in other bankruptcy courts. See TR at 136. The court finds this fear illusory. Bankruptcy is an extreme remedy that is unlikely to be elected by every entity seeking to delay a threatened license termination. Here, for instance, the court is satisfied that Debtors filed chapter 11 not as a litigation tactic solely designed to delay the Commission, but rather for the legitimate purpose of addressing its very real debt problems.
Ip. The Public Interest
Again, it is not for this court to determine whether terminating or extending the Licenses would serve or disserve the public interest; that is for Defendant to decide and the D.C. Circuit to review. The only question before this court is whether or not granting a temporary stay prohibiting Defendant from redistributing the Licenses pending a final non-appeal-able order will serve the public interest.
Courts have often held that injunctions that facilitate reorganizations serve the public interest.
Thus, given the foregoing, an injunction should issue.
III. CONCLUSION
The court, in its 9/27 Order, has tailored the granted injunction with care to avoid infringement of the Commission’s adjudicatory function.
For these and the other reasons stated in this memorandum opinion, to the extent provided in the 9/27 Order, the Motion is granted in part and otherwise denied.
Notes
. All documents cited from the docket in this memorandum opinion may be located in the underlying adversary proceeding, cause no. 12-4104-dml, unless otherwise noted.
. See Fed. R. Bankr.P. 7001(7). Although Debtors brought the instant case as an adversary proceeding, Debtors filed only a single motion requesting either to enforce the automatic stay or, alternatively, for injunctive relief. To the extent Debtors ask this court to enforce the automatic stay, the Motion also constitutes a contested matter pursuant to Fed. R. Bankr.P. 9014.
. Debtors in these jointly administered chapter 11 cases are: (1) FiberTower Network Services Corp.; (2) FiberTower Corporation (''FTWR”); (3) FiberTower Licensing Corp.; and (4) FiberTower Spectrum Holdings, LLC.
. 11 U.S.C. §§ 101 etseg.
. Debtors filed their Memorandum of Law in Support of Debtors’ [Motion] at docket no. 4 on August 23, 2012. In response, Defendant filed [Defendant’s] Objection to Debtors’ Emergency Motion to Enforce Automatic Stay or for Injunctive Relief (the "Objection") at docket no. 14 on September 4, 2012. Debtors filed Debtors’ Reply in Support of [the Motion] (the "Reply”) at docket no. 17 on September 7, 2012.
. The portions admitted are set forth at Transcript of Proceedings, September 12, 2012 at 31-37 at docket no. 38. Hereinafter, the transcript will be cited as TR (name of witness, if applicable) at_
. The court also received into evidence letters to the Commission from Debtors, Debtors’ customers, and a trade organization.
Following the Hearing, Defendant also filed a conditionally unopposed motion to file a supplemental statement to correct certain allegedly incorrect statements Van Wagenen made during his testimony regarding whether, under applicable administrative law, a licensee can revive or shield automatically terminated licenses by expanding its network infrastructure after the termination deadline. See docket no. 37. Debtors then filed a response. See docket no. 39. However, the court's opinion does not require the court to resolve whether actions taken after a termination deadline affect a licensee’s entitlement to its licenses. See infra note 18.
. See also supra note 2.
.These guarantors were (1) FiberTower Broadband Corp.; (2) FiberTower Licensing Corp.; (3) Teligent Services Acquisition, Inc.; (4) FiberTower Network Services Corp.; (5) FiberTower Solutions Corp.; and (6) Fiber-Tower Spectrum Holdings LLC. Petition Declaration V 12 n.6.
. See supra note 9.
. See supra note 9.
. See supra note 9.
.In addition to the 2016 Notes and 2012 Notes, Debtors have approximately $30 million of unsecured liabilities, consisting of trade payables and other general unsecured pre-petition claims. Petition Declaration ¶ 16. Debtors are also parties to numerous executory contracts. Id.
FTWR is authorized to issue 400 million shares of common stock, par value of $0.001, of which approximately 48 million shares are outstanding. Approximately 16 million shares are owned by insiders. Id. ¶ 17. Although FTWR’s common stock was once traded on NASDAQ, it was delisted effective January 30, 2012, and is now traded over the counter. Id.
FTWR also owns, directly or indirectly, 100% of the equity interests in each Debtor and non-debtor subsidiary. Id.; see also supra note 9.
. The Proposed Plan may be found at Plan Support Agreement, infra note 15, Ex. B. A concise summary of the Proposed Plan may be found at Petition Declaration, Ex. A.
. The Plan Support Agreement may be found at Petition Declaration, Ex. B.
. See, e.g., Amendments to Part 1, 2, 87, and 101 of the Commission's Rules to License Fixed Services at 24 GHz, Report and Order, 26 F.C.C.R. 11614 (2000) (“24 GHz Order’’); Amendment of Commission's Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, Report and Order and Second Notice of Proposed Rulemaking,
. Neither the Petition Declaration nor the Complaint Declaration specify precisely when the Licenses were initially granted. Nor did Van Wagenen explicitly specify at the Hearing the exact date the Licenses were first granted. See TR (Van Wagenen) at 24-26, 28-43. The court has inferred that the Licenses were granted in 1998 because, according to Van Wagenen, the Licenses were "granted for ten years, subject to renewal,” and “were renewed back in 2008.” Id. at 39.
. The parties dispute whether, under the Communications Act and the cases and regulations implementing and interpreting it, a Commission licensee’s network build-out after the expiry of a termination deadline can shield licenses from termination or revive licenses that have been terminated. See supra note 7. As will become clear below, it is unnecessary to resolve this question here. No matter whether Debtors currently hold an interest in the Licenses that can be revived or shielded through further construction, or if instead they merely hold an interest in, inter alia, the right to seek reconsideration of and appeal an adverse decision by the Commission, that interest is property of the bankruptcy estate and therefore falls within this court's jurisdiction. Code § 541(a)(1); 28 U.S.C. §§ 1334, 157(b)(2)(A).
. This document may be located in the underlying bankruptcy proceeding, cause no. 12-44027-dml-ll, at docket no. 219.
. At this juncture, the court need not decide whether the Licenses terminated automatically on June 1, 2012. At the Hearing, Defendant conceded that if Debtors’ failure to satisfy the Safe Harbor/Substantial Service Standard was due to circumstances beyond its control, then the Licenses did not automatically terminate on June 1, 2012, and Debtors would have some cognizable interest in the Licenses. See TR at 128-29; see also 47 C.F.R. § 1.946(e)(1). Finding and concluding that the Licenses did or did not automatically terminate on the deadline would require this court to determine, inter alia, whether or not exigent circumstances existed at the time Debtors applied for either a waiver of the Commission’s safe harbor rules or an extension of time. This would require the court to do exactly what Defendant argues this court lacks the power to do: adjudicate Debtors’ rights vis-a-vis the Licenses on the basis of information and expertise assertedly beyond this court’s ken. See In re FCC,
. "The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction&emdash;
(1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate....” 28 U.S.C. § 1334(e). 28 U.S.C. § 157 in turn provides that bankruptcy cases over which the district court exercises exclusive jurisdiction may be referred to the bankruptcy court. Such reference has been made in this district. N.D. Tex. Mise. Rule 33.
. See TR at 137.
. Code § 362(b)(4). This doctrine is known as the “pecuniary interest test.” E.g., Trinity Meadows Raceway, Inc. v. Texas Racing Comm'n (In re Trinity Meadows Raceway, Inc.), Bankruptcy No. 97-41392-DML-7, Adversary No. 06-04165,
Notwithstanding Debtors’ argument to the contrary, the record reveals no basis for concluding that the Commission’s threat to terminate the Licenses is motivated by pecuniary gain. Rather, the Commission seeks to ensure that Debtors comply with the Safe Harbor. See infra note 24. The Commission's intended actions are therefore not stayed under Code section 362.
. Debtors contend that the exception is inapplicable because the Commission’s threatened termination of the Licenses would not protect the public health and safety. This reasoning reflects an overly narrow view of section 362(b)(4). While Debtors are correct that Congress intended that section 362(b)(4) be narrowly construed, see, e.g., McMullen v. Sevigny (In re McMullen),
.Code section 362(b)(4) was amended in 1998 to provide that the Code does not operate as a stay
under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of the commencement or continuation of an action or proceeding by a governmental unit or any organization exercising authority under the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, opened for signature on January 13, 1993 [the "Convention”], to enforce such governmental unit’s or organization's police and regulatory power....
(emphasis added).
The purpose of the amendment was (i) to make it clear that any organization exercising authority under the ... Convention would be entitled to the benefits of the section, and (ii) to extend the application of former (b)(4) and (b)(5) to acts under § 362(a)(3) and (a)(6) in addition to (a)(2) and (a)(1) that were previously excepted under the prior provisions.
Norton Bankruptcy Law and Practice 3D, at 337.
Debtors argue that the effect of this amendment is to render Defendant’s intended actions ineligible for the exception to the automatic stay. There are two ways to interpret Debtors' argument&emdash;one simplistic, and one sophisticated. Both, however, fail. The court will dispose of each in turn.
Debtors contend in their brief that “the conventional, plain language of the amendment's text confirms that it should apply only to police and regulatory actions taken pursuant to the ... Convention.” Reply, supra note 5, at 3. If by this Debtors mean that a government agency must be acting pursuant to the Convention in order to qualify for the exception for actions that otherwise would be stayed under section 362(a)(3), case law amply demonstrates they are incorrect. E.g., Suter v. District of Columbia (In re Suter), No. Civ.A. 2005-2118,
The alternative reading of Debtors' argument is as follows: section 362(b)(4) does not except license termination proceedings from the automatic stay because the amendment was not intended to significantly expand the reach of that section to allow regulatory agencies to interfere as they please with property of the bankruptcy estate. In other words, argue Debtors, the amendment should not be read to "allow a governmental unit to do anything, and take any action it wanted” against a bankrupt debtor, “short of actually enforcing a money judgment.” Reply, supra note 5, at 4 n.ll. Instead, insofar as the amendment applies to the types of governmental actions described in sections 362(a)(3) and (a)(6), it should be read to exempt from the automatic stay only those actions most analogous to acts a governmental unit would take pursuant to the Convention.
This argument too is unpersuasive. This court has held, and the Fifth Circuit agreed, that, even prior to Congress’s amendment of 362(b)(4) in 1998, a regulatory agency seeking to terminate a license could do so without violating section 362(a)(3). Trinity Meadows,
Debtors attempt to support their argument by citing Maricopa County v. PMI-DVW Real Estate Holdings, LLP (In re PMI-DVW Real Estate Holdings LLP),
. United States v. Sutton,
. Bear v. Coben (In re Golden Plan of Cal., Inc.),
. MacArthur Co. v. Johns-Manville Corp. (In re Johns-Manville Corp.),
. Go West Entm’t v. N.Y. State Liquor Auth. (In re Go West Entm't),
. See, e.g., Mirant,
. See Urban Communicators PCS Ltd. P’ship v. Gabriel Capital, LP,
. See Gross v. SES Americom, Inc.,
. See, e.g., Marsch v. Marsch (In re Marsch),
.See Hunt,
See also F.G.M. Assocs., Inc. v. City of East Providence (In re F.G.M. Assocs., Inc.),17 B.R. 765 , 768 (Bankr.D.R.1.1982), remanded on other grounds by In re F.G.M. Assocs., Inc.,21 B.R. 442 (1st Cir. BAP 1982). Go West,387 B.R. at 442-45 , and Wilner,128 B.R. at 2-4 , denied injunctive relief in circumstances similar to those present inF.G.M., but Go West and Wilner are distinguishable from the instant case. Unlike the Commission, the agencies sought to be enjoined in Go West and Wilner were state agencies. The courts in Go West and Wil-ner ruled that they lacked the authority to issue the requested injunctive relief because of principles of comity and federalism, as well as the importance of "avoiding] needless friction between Federal and State courts.” Go West, 387 B.R. at 442-45 ; accord Wilner,128 B.R. at 2-4 . In any event, Go West and Wilner are merely persuasive authorities that do not bind this court.
. It is helpful in this regard to distinguish the Commission’s adjudicatory powers from its executive powers. The court does not wish to usurp the Commission's adjudicatory authority to determine the status of the Licenses. The court only seeks to delay the Commission from executing whatever judgment it reaches after completing its initial adjudication respecting the Licenses. The court is certainly aware that the lines between the executive, "quasi-legislative,” and "quasi-judicial” powers of an administrative agency are blurry, and that courts and commentators have warned against relying too heavily upon potentially ephemeral distinctions between the three in other contexts. See, e.g., Morrison v. Olson,
. See generally Goldie’s Bookstore, Inc. v. The Superior Court of the State of Cal.,
. See Plan Support Agreement § 7.1(a)(vi); Cash Collateral Order § 4; Complaint Declaration ¶ 4.
. Defendant argues that Debtors' injuries are self-inflicted, as they are a result of (1) Debtors' choice to risk license termination and pursue market-based solutions, rather than use the resources at their disposal to satisfy the Safe Harbor, and (2) Debtors’ decision to enter into the Cash Collateral Order and the Plan Support Agreement, which conditioned Debtors' financing on the continued validity of the Licenses, knowing that a substantial majority of the Licenses failed to satisfy the Safe Harbor. Thus, Defendant argues, Debtors’ injuries are not irreparable. See Salt Lake Tribune Pub. Co., LLC v. AT & T Corp.,
. As noted above, the Communications Act and the regulations implementing it provide that Debtors could potentially obtain a stay pending appeal of an adverse decision respecting the Licenses to the full Commission and/or the D.C. Circuit. 47 C.F.R.
. See supra note 33.
. E.g., SAS Overseas Consultants v. Benoit, No. Civ.A. 99-1663,
. See supra note 35.
. See supra notes 31-32 and accompanying text.
.The Commission may seek relief from the 9/27 Order at any time if the facts warrant.