Open Range Proceeding May Pit Creditors Against RUS, FCC
A demand to interview high ranking officials including FCC Chairman Julius Genachowski and Agriculture Secretary Thomas Vilsack has soured cooperation between the government and Open Range stakeholders within Open Range’s bankruptcy proceeding, filings show (http://xrl.us/bmqcqt). The Open Range’s Unsecured Creditors Committee has sought to compel the Justice Department to make FCC and USDA officials available, something the DOJ said Friday it won’t do and isn’t required to do. Rural Utilities Service Administrator Jonathan Adelstein, RUS Broadband Division Chief Kenneth Kuchno and other RUS officials have already been interviewed and thousand of government documents have been provided, said the DOJ.
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Open Range’s bankruptcy (CD Oct 7 p6) may pit Open Range’s creditors against the U.S. government, though a bankruptcy judge hasn’t ruled on a pending committee motion to “prosecute certain claims and causes of action.” The committee seeks to go after the U.S. government for breach of contract and breach of fiduciary duty, among other things. RUS approved a loan of $267 million for Open Range in March 2008, under President George W. Bush appointee RUS Administrator Jim Andrew. The RUS and FCC didn’t comment.
Much of the focus seems to be on decision making over the last two years, the filings show. The FCC in September 2010 declined a request from mobile satellite service operator Globalstar to allow it to continue to lease its ancillary terrestrial component spectrum to Open Range (CD Sept 16/10 p6) for WiMAX services. The FCC later granted Open Range special temporary authority (STA) to continue operations in the band, though limiting the expansion of Open Range until it found new spectrum. So far, RUS Broadband Division employees Deborah Jackson, Scott Steiner, Anthony James Tindall and Farwa Naqvi, have been interviewed, in addition to Adelstein and Kuchno, according to bankruptcy filings. The interviews were part of a preliminary investigatory agreement between the government and the committee.
The committee has since asked to interview Genachowski, Vilsack, FCC Office of Strategic Policy Chief Paul de Sa, RUS Assistant Administrator David Villano and Lindsey Daschle, an adviser to Vilsack. The DOJ disagreed that the interviews were necessary. The U.S. doesn’t “consent to further new discovery, primarily because it is now apparent that further investigation would be futile,” said the Justice Department. It asked the committee “to identify possible claims against RUS and the FCC that might be uncovered by further investigation,” but no “colorable claims” have been identified, DOJ said. As such, the creditors don’t have the right to a “formal discovery process,” it said.
The committee is also limited in its ability to bring a claim against the U.S. and the roles of RUS and the FCC are different, the DOJ said. The FCC’s role is of a regulator and while a decision on Globalstar’s spectrum may have hurt Open Range’s business plan, it doesn’t create a claim against the agency, DOJ said. Also, Open Range never appealed the spectrum decisions. RUS, meanwhile, is a lender, and the bankruptcy court doesn’t have jurisdiction over contract claims against the U.S., said the DOJ.
The committee has said the government was not as forthcoming as it should have been with document requests and didn’t provide explanations for heavily redacted documents. Again, these complaints don’t apply because there is no formal discovery process, the Justice Department said.