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original purchase price.24 The trustee then claimed that the proceeds from the sale of the new license was property of the estate.
The Ninth Circuit rejected this claim, however, because the debtor never had an interest in the new license. Said the court, under the Federal Communications Act, the debtor never had an interest in the actual radio spectrum, but only a very limited license to use the spectrum. The cancellation of the license effectively extinguished all rights the debtor had under that license. The court of appeals further determined that cancellation was not an act of foreclosure or lien enforcement, which otherwise would have granted the debtor an interest in the "surplus proceeds" from the sale of the new license under the UCC. The court also noted that section 525 may have barred the FCC from cancelling the license but did not reach the issue, as it was never raised.
* Telluride Global Development, LLC v. Bullock (In re Telluride Global Development, LLC), 380 B.R. 585 (10th Cir. B.A.P. Dec. 2007) (Michael, J.)
Investors' state court action was not a "prior pending action" and did not require the court's abstention where the investors were not intended third party beneficiaries of the pre-petition agreements. The Bankruptcy Appellate Panel affirmed the bankruptcy court's ruling that a group of investors were not intended third party beneficiaries to pre-petition agreements regarding the debtor's real estate projects. Said the panel, none of the investors signed the agreements, none were named parties in the agreements, and none of the investors gave consideration for the agreements. To the extent that the agreements purported to give the investors any rights in the debtor's property or real estate projects, the panel deemed those sections of the agreements as merely creating a repayment priority scheme using profits received from the projects.
The panel also concluded that the bankruptcy court's refusal to apply the "prior pending action" doctrine to the adversary proceeding was not clearly erroneous. First, the panel noted that the doctrine only applied to prior pending federal actions. The doctrine, therefore, could not apply to a pre-petition state action which was removed to federal court and then remanded to state court. And, even under the standards of section 1334(c), the bankruptcy court's refusal to abstain was not clearly erroneous in light of its finding that the investors were not intended third party beneficiaries to the pre-petition agreements. While the investors asserted rights in the projects by way of equitable liens, the bankruptcy court declined to accept the equitable lien argument, and without a transcript or a record from the bankruptcy court, concluded the panel, there was no evidence in the appellate record from which the panel could conclude that the bankruptcy court's holding was erroneous.
24 While the Ninth Circuit's discussion arguably questions whether this holding was correct (at least, implicitly), the bankruptcy court's order disallowing the FCC's proof of claim was issued separately from the order before the Ninth Circuit in this case.
