A consortium uniting Apple, Inc. and Microsoft with other top players in the software, electronics and wireless handset industries outplayed Google in a bankruptcy court auction for Nortel’s patent portfolio, posting a winning offer of $4.5 billion for the trove of 6,000 patents that cover fourth-generation wireless, data networking, Internet, and semiconductor technologies.
Introduction
On June 23, 2011, after fifteen years of hugely acrimonious litigation, the Supreme Court of the United States (the “Court”) issued a decision on a narrow legal issue that may end up significantly limiting the scope of bankruptcy courts’ core jurisdiction.
Section 108 of the Bankruptcy Code grants a two-year extension of time for a trustee in bankruptcy (or a debtor in possession) to bring law suits, provided that the applicable period to sue didn’t expire before the petition date. It also gives a short extension to the trustee for filing pleadings, curing defaults, and performing other acts on behalf of the debtor. These provisions afford a trustee and debtor in possession valuable time to discover and evaluate potential causes of action and to perform other acts to preserve the debtor’s rights.
Google stepped closer to acquiring Nortel’s portfolio of 6,000 telecommunications, wireless and Internet patents on Monday as courts in the U.S. and Canada approved the web search giant’s “stalking horse” offer of $900 million for those patents. Announced on April 4, Google’s offer effectively constitutes the opening bid in an auction that will be decided at a joint hearing of the U.S. and Canadian courts on June 30. The auction also opens the latest chapter in the ongoing bankruptcy process for Nortel.
There was good news on two fronts this week for direct broadcast satellite (DBS) operator DISH Network. On Sunday, DISH settled a retransmission dispute with LIN Media with the signing of a new carriage contract that restored to DISH subscribers LIN broadcast network signals that were cut off on March 5. That development was followed by a New York bankruptcy court’s decision on Tuesday to approve a revised agreement through which DISH would acquire the assets of bankrupt mobile satellite services (MSS) provider DBSD North America for $1.5 billion.
Chinese telecom equipment firm Huawei Technologies said Monday that it would wait for a decision from President Obama before it acts on a U.S. national security panel’s recommendation that it divest 3Leaf Systems, a small U.S. technology firm that Huawei bought out of bankruptcy in May. Huawei, which recently claimed the rank of the world’s second-largest supplier of telecommunications equipment, acquired 3Leaf—a start-up provider of server technologies—without first notifying the Committee on Foreign Investment in the United States (CFIUS).
Regional landline network operator Fairpoint Communications is finally poised to emerge from Chapter 11 bankruptcy as a result of the decision of the Vermont Public Safety Board (VPSB) to approve the company’s amended reorganization plan. Vermont had been the lone holdout among Maine, New Hampshire and 15 other states that had previously endorsed the plan. The reorganization was precipitated largely by the financial burden of FairPoint’s $2.3 billion purchase of New England landlines from Verizon Communications in 2008.
Introduction
In CML V, LLC v Bax, the Court of Chancery held that a creditor of JetDirect Aviation Holdings, LLC, a Delaware limited liability company ("JetDirect"), did not have derivative standing to assert breach of fiduciary duty claims against the board of managers of the insolvent JetDirect. The creditors would have had standing if JetDirect were a Delaware corporation, but the Court found that the Delaware LLC Act does not allow an LLC’s creditors to bring derivative claims when a Delaware LLC is insolvent (or at any other time).
Straining under a debt burden in excess of $1 billion, TerreStar Networks filed a petition for Chapter 11 protection with a New York bankruptcy court on Tuesday. Known formerly as Motient Corp., TerreStar is in the midst of deploying a hybrid terrestrial/mobile satellite network that would serve rural and other hard-to-reach areas in the U.S.