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Circuit OK’s Airadigm’s Second Reorganization

CHICAGO (CN) - The 7th Circuit ratified a second plan of reorganization for Airadigm Communications, a cellular-service provider whose first reorganization led the Federal Communications Commission to cancel its 15 licenses.

In light of a 2003 U.S. Supreme Court decision, which barred the FCC from canceling debtors' licenses simply because they filed for bankruptcy, the FCC reinstated Airadigms licenses. The company still owes the FCC $64.2 million for the licenses it bought.

Airadigm filed a second Chapter 11 petition in May 2006, and asked the court to sever the FCC's continuing interest in the licenses based on the first reorganization plan in 2000. The bankruptcy court and the district court both ratified the second plan with the FCC as a partially secured creditor after determining that the 2000 plan did not affect the FCC's interest in the licenses.

Affirming their rulings, the appeals court concluded that the second plan complies with bankruptcy code and does not conflict with FCC regulations.

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