Mobilicity Planning to Ask Court to Force Sale of Spectrum Licences

by Istvan Fekete on January 8, 2014

With the spectrum transfer moratorium just a month away, Mobilicity is playing all its cards: it has plans to ask the Ontario Superior Court of Justice to allow the transfer of its spectrum licences to another incumbent. The initiative comes at a time when the government has been sending clear messages to industry players regarding the transfer of set-aside spectrum purchases: it won’t allow it.

The struggling wireless startup aims to use a section of the Companies’ Creditors Arrangement Act (CCAA), which allows a court to assign the “rights and obligations” of a debtor company to another party, reports the Globe and Mail based on the obtained court filing.

This is kind of interesting, as Mobilicity currently evaluates bids as part of a court-approved sales process. Wind Mobile is the only bidder that has made their interest public, but as previous court filings have suggested, there are several other interested and qualified bidders as well. However, since Wind’s alleged $190 million bid depends on its foreign backer, some question the viability of this offer.

Since the time is ticking and Mobilicity needs to find a buyer very soon because it is running out of cash – according to the latest estimations, the carrier has enough money to operate the business until the first week of February – it is attacking on all frontiers. Its recent motion aiming to force the sale of its licences to an incumbent hinges on the argument that CCAA legislation supersedes other federal laws, including the Radiocommunication Act that gives the industry minister the power over spectrum licences and terms.

“In the circumstances, it is impractical to properly evaluate the bids without a clear understanding of the timing and the ability to transfer the Mobilicity Spectrum Licenses to any third party,” reads the notice of motion.

“Mobilicity has submitted a motion to the Ontario court as part of the ongoing sales process to establish a procedure and process by which the CCAA Court in the future, if needed, would consider the assignment of all or any of the Mobilicity spectrum licences under the provisions of the CCAA. This motion is contingency planning to ensure a fair and reasonable process and that any potential transaction be able to be consummated and completed with the requisite certainty and speed envisioned under the CCAA Court approved sales process.”

Industry Minister James More reacted immediately to Mobilicity’s attempt through press secretary Jake Enwright: “Our thoughts are with Mobilicity’s employees who may have been impacted by this restructuring. Our government will not approve spectrum-transfer requests that decrease competition in our wireless sector. We look forward to the court’s positive ruling on this matter.”

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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