Case Background
Primus
Telecommunications, Inc. (Primus) currently holds local exchange
telecommunications company Certificate No. 7269, issued on December 29, 1999. Pursuant to Section 364.336, Florida Statutes
(F.S.), telecommunications companies must pay a minimum annual Regulatory
Assessment Fee (RAF) if the certificate or registration was active
during any portion of the calendar year and late payment charges as outlined in
Section 350.113, F.S., for any delinquent amounts.
On February 2,
2016, Birch Telecom of the South, Inc. d/b/a Birch Telecom d/b/a Birch
Communications (Birch) notified the Commission that Primus would be
transferring its Florida customers to Birch. Birch is a Delaware corporation, and is a
wholly owned subsidiary of Birch Communications, Inc. (BCI). Primus is a Delaware corporation held by
PTUS, Inc., which is a Delaware corporation and wholly owned subsidiary of
Holdco, Inc., a private company incorporated under the Ontario Business
Corporations Act, with registered head offices in Toronto, Canada. Both Birch and BCI are authorized by the
Commission to provide local exchange services in Florida.
On January 18,
2016, BCI and Primus entered into an Asset Purchase Agreement (Agreement)
pursuant to which BCI would purchase certain assets and customers of Primus,
including certain customer accounts and receivables, certain customer
agreements and contracts, certain vendor agreements and contracts, certain
equipment, and certain intellectual property. BCI, however, would not assume any of
Primus’ pre-closing liabilities or obligations.
On January 19,
2016, Primus filed an application for court protection in Ontario, Canada,
pursuant to the provisions of Canada’s Companies’ Creditors Arrangement Act, (the CCAA), R.S.C. 1985, c.
C-36, the statute under which debtors may be granted relief from creditors. In
addition, Primus requested authorization to apply for recognition in the United
States pursuant to Chapter 15 of the United States Bankruptcy Code.
On January 19,
2016, an Initial Order was entered by the Ontario Superior Court of Justice, finding
Primus insolvent and granting Primus CCAA protection while it is liquidated and
winds downs operations.
On January 21,
2016, Primus filed a Chapter 15 Petition for Recognition of a Foreign
Proceeding in the United States Bankruptcy Court for the District of Delaware, which resulted in the pro forma assignment
of Primus’ Florida telecommunications authorization from Primus
Telecommunications, Inc. to Primus Telecommunications, Inc.,
debtor-in-possession. In addition, the United States Bankruptcy Court issued an
Order granting Primus a stay of any and all actions or proceedings against it
or its assets in the United States pursuant to Sections 362 and 365 of the
Bankruptcy Code, pending the formal recognition of the foreign proceeding by
the United States Bankruptcy Court.
On
February 25, 2016, the Ontario Superior Court of Justice issued an Approval and
Vesting Order, approving the sale transactions outlined in the Agreement
between Primus and Birch, and approving transfer and vesting of Primus
regulated customer relationships to BCI free and clear of all encumbrances. In addition, the court respectfully
requested that its Order be recognized and given effect by any court, tribunal,
regulatory or administrative body having jurisdiction in the United States or
Canada.
On
March 2, 2016, the Ontario Superior Court of Justice issued an Assignment
Order, assigning the rights and obligations of Primus under the assigned
contracts outlined in the Agreement between Primus and Birch, to BCI free and
clear of all encumbrances.
On
March 4, 2016, the United States Bankruptcy Court for the District of Delaware issued
an Order recognizing and enforcing the
Assignment, Approval and Vesting and Distribution Orders of the Canadian Court
and granting related relief.
On March 18, 2016, Commission staff
received an email from Primus stating that the Canadian Bankruptcy includes all
prior debts, such as RAF fees and penalties owed by Primus for 2015.
On
May 3, 2016, certain Primus operating assets and customers were sold to BCI, in
accordance with the Agreement and Order
Pursuant to Sections 363, 365, 1501, 1517, 1519, 1520, 1521 and 105(a) of the
Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 9014, For Entry of an Order
Recognizing and Enforcing the Assignment, Approval and Vesting and Distribution
Orders and Granting Related Relief, issued by United States Bankruptcy
Court Judge Laurie Selber Silversteen.
On
June 28, 2016, Birch notified this Commission that the transfer of
Primus Florida customers to Birch was consummated effective on May 3, 2016, and
requested cancellation of Primus CLEC certificate. On July 19, 2016, the Commission received a
letter from counsel for Primus, confirming Primus transferred its Florida
customer base to Birch, effective May 3, 2016, and requesting a
cancellation of its certificate of authority to offer telecommunications services in
Florida and its tariffs on file with the Commission.
This
recommendation addresses Primus’ request for bankruptcy cancellation of
its local exchange certificate. The
Commission has jurisdiction over this matter pursuant to Chapter 364, F.S.,
and Section 350.113, F.S.
BEFORE THE FLORIDA
PUBLIC SERVICE COMMISSION
|
In re: Bankruptcy cancellation by Florida Public Service Commission
of CLEC Certificate No. 7269, issued to Primus Telecommunications, Inc.,
effective July 19, 2016.
|
DOCKET NO. 160162-TX
ORDER NO.
ISSUED:
|
The following Commissioners participated in the
disposition of this matter:
JULIE I. BROWN,
Chairman
LISA POLAK EDGAR
ART GRAHAM
RONALD A. BRISÉ
JIMMY PATRONIS
NOTICE
OF PROPOSED AGENCY ACTION ORDER GRANTING CANCELLATION OF LOCAL EXCHANGE
CERTIFICATE DUE TO BANKRUPTCY
BY THE COMMISSION:
NOTICE
is hereby given by the Florida Public Service Commission that the action
discussed herein is preliminary in nature and will become final unless a person
whose interests are substantially affected files a petition for a formal
proceeding, pursuant to Rule 25-22.029, Florida Administrative Code (F.A.C.).
Case Background
Primus
Telecommunications, Inc. (Primus) currently holds local exchange
telecommunications company Certificate No. 7269, issued on December 29,
1999. Pursuant to Section 364.336,
Florida Statutes (F.S.), telecommunications companies must pay a minimum annual
Regulatory
Assessment Fee (RAF) if the certificate was active during any portion of
the calendar year and late payment charges as outlined in Section 350.113,
F.S., for any delinquent amounts.
On
February 2, 2016, Birch Telecom of the South, Inc. d/b/a Birch Telecom d/b/a
Birch Communications (Birch) notified this Commission that Primus would be
transferring its Florida customers to Birch.[16]
Birch is a Delaware corporation, and is a wholly owned subsidiary of Birch Communications,
Inc. (BCI). Primus is a Delaware
corporation held by PTUS, Inc., which is a Delaware corporation and wholly
owned subsidiary of Holdco, Inc., a private company incorporated under the
Ontario Business Corporations Act, with registered head offices in
Toronto, Canada.[17] Both Birch and BCI are authorized by this
Commission to provide local exchange services in Florida.[18]
On January 18, 2016, BCI and Primus entered into an
Asset Purchase Agreement (Agreement) pursuant to which BCI would purchase
certain assets and customers of Primus, including certain customer accounts and
receivables, certain customer agreements and contracts, certain vendor
agreements and contracts, certain equipment, and certain intellectual property.[19] BCI,
however, would not assume any of Primus’ pre-closing liabilities or
obligations.[20]
On January 19, 2016, Primus filed an application[21] for court
protection in Ontario, Canada, pursuant to the provisions of Canada’s Companies’
Creditors Arrangement Act, (the
CCAA), R.S.C. 1985, c. C-36, the statute under which debtors may be granted
relief from creditors. In addition, Primus requested authorization to apply for
recognition in the United States pursuant to Chapter 15 of the United States
Bankruptcy Code.[22]
On January 19, 2016, an Initial Order was entered by
the Ontario Superior Court of Justice, finding Primus’ financial situation
rendered it insolvent, and granting Primus CCAA protection while it is
liquidated and winds downs operations.
On January 21, 2016, Primus filed a Chapter 15 Petition
for Recognition of a Foreign Proceeding in the United States Bankruptcy Court
for the District of Delaware,[23] which
resulted in the pro forma assignment of Primus’ Florida
telecommunications authorization from Primus Telecommunications, Inc. to Primus
Telecommunications, Inc., debtor-in-possession. In addition, the United States
Bankruptcy Court issued an Order granting Primus a stay of any and all actions
or proceedings against it or its assets in the United States pursuant to
Sections 362 and 365 of the Bankruptcy Code, pending the formal recognition of
the foreign proceeding by the United States Bankruptcy Court.[24]
On February 25,
2016, the Ontario Superior Court of Justice issued an Approval and Vesting
Order, approving the sale transactions outlined in the Agreement between Primus
and Birch, and approving transfer and vesting of Primus regulated customer
relationships to BCI free and clear of all encumbrances.[25]
In addition, the court respectfully requested that its Order be recognized and
given effect by any court, tribunal, regulatory or administrative body having
jurisdiction in the United States or Canada.
On March 2,
2016, the Ontario Superior Court of Justice issued an Assignment Order,
assigning the rights and obligations of Primus under the assigned contracts
outlined in the Agreement between Primus and Birch, to BCI free and clear of
all encumbrances.[26]
On March 4,
2016, the United States Bankruptcy Court issued an Order recognizing and enforcing the Assignment, Approval and Vesting and
Distribution Orders of the Canadian Court and granting related relief.[27]
On March 18,
2016, our staff received an email from Primus stating that the Canadian
Bankruptcy included all prior debts, such as RAF fees and penalties owed by
Primus.[28]
On
May 3, 2016, certain Primus operating assets and customers were sold to BCI, in
accordance with the Agreement and Order
Pursuant to Sections 363, 365, 1501, 1517, 1519, 1520, 1521 and 105(a) of the
Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 9014, For Entry of an Order
Recognizing and Enforcing the Assignment, Approval and Vesting and Distribution
Orders and Granting Related Relief, issued by United States Bankruptcy
Court Judge Laurie Selber Silversteen.
On June 28,
2016, Birch notified us that the transfer of Primus Florida customers to
Birch was consummated effective on May 3, 2016, and requested cancellation of
Primus CLEC certificate.[29] On July
19, 2016, we received a letter from counsel for Primus, confirming Primus transferred its Florida customer base to Birch,
effective May 3, 2016, and requesting a cancellation of its certificate
of authority to offer telecommunications
services in Florida and its tariffs on file with this Commission.[30]
We
are vested with jurisdiction over this matter pursuant to Chapter 364, F.S.,
and Section 350.113, F.S.
DECISION
Pursuant to
Section 364.336, F.S., telecommunications companies must pay a minimum annual RAF if
their certificate was active during any portion of the calendar year and late
payment charges as outlined in Section 350.113, F.S., for any delinquent
amounts.
Primus filed a Chapter
15 Petition for Recognition of a Foreign Proceeding[31]
in the United States Bankruptcy Court in the District of Delaware pursuant to 11 U.S.C.
§ 1504 of the US Bankruptcy Code.
The purpose of Chapter 15 is to provide effective mechanisms for
dealing with insolvency cases involving debtors, assets, claimants, and other
parties of interest involving more than one country.[32] A
Chapter 15 bankruptcy proceeding is ancillary to a primary proceeding brought
in another country, usually the debtor’s home country. Immediately upon the
recognition of a foreign main proceeding, the automatic stay and selected other
provisions of the Bankruptcy Code, such as 11 U.S.C. § 362, take effect within the
United States.[33]
Pursuant to 11
U.S.C. § 362 (a)(1), (2) and (6), the filing of a petition for
bankruptcy relief acts as an automatic stay that bars an action or proceeding
against the debtor that was or could have been commenced before the bankruptcy
case. Thus, a governmental entity such as this Commission is enjoined from
exercising our regulatory authority to collect, assess or recover pre-petition
debt, such as RAFs.
In addition, in
any bankruptcy liquidation or reorganization, secured creditors are given the
highest priority in the distribution and, normally, receive all of the
distributed assets. RAFs, late payment
charges, and penalties owed by a company to this Commission, as well as
monetary settlements of cases resolving issues of failure to pay such fees, are
not secured debts and, as a practical matter, are uncollectible in a bankruptcy
proceeding where liquidation occurs.
Therefore, we would be prevented from
collecting the RAFs owed by this company, and from assessing and collecting a
penalty for failure to pay the fees. Primus currently owes RAFs plus statutory interest and
penalties for 2015. In addition, Primus will owe RAFs for 2016.
Accordingly,
we hereby find that Primus Telecommunications, Inc.’s Certificate No. 7269,
shall be cancelled due to bankruptcy, effective July 19, 2016. In addition, any unpaid RAFs, including any
statutory interest and penalties, shall be sent to the Florida Department of
Financial Services to request permission for this Commission to write off the
uncollectible amount.
Based
on the foregoing, it is
ORDERED
by the Florida Public Service Commission that Primus Telecommunications, Inc.’s
Certificate No. 7269, to provide local exchange
telecommunications service is hereby cancelled, effective July 19, 2016, due to bankruptcy. It is further
ORDERED
that any outstanding Regulatory Assessment Fees, including any accrued statutory
interest and penalties owed by Primus Telecommunications, Inc., shall be sent
to the Department of Financial Services.
The Division of Administrative and Information Technology Services shall
request permission to write off the uncollectible amount. It is further
ORDERED
that Primus Telecommunications, Inc. shall immediately cease and desist
providing telecommunication services
in Florida. It is further
ORDERED that the
provisions of this Order, issued as proposed agency action, shall become final
and effective upon the issuance of a Consummating Order unless an appropriate
petition, in the form provided by Rule 28-106.201, F.A.C., is received by the
Office of Commission Clerk, 2540 Shumard Oak Boulevard, Tallahassee, Florida
32399-0850, by the close of business on the date set forth in the “Notice of
Further Proceedings” attached hereto. It
is further
ORDERED
that in the event this Order becomes final, this docket shall be closed.
By
ORDER of the Florida Public Service Commission this
day of ,
.
|
|
|
|
|
CARLOTTA S. STAUFFER
Commission Clerk
|
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, Florida 32399
(850) 413‑6770
www.floridapsc.com
KFC
NOTICE OF FURTHER
PROCEEDINGS OR JUDICIAL REVIEW
The
Florida Public Service Commission is required by Section 120.569(1), Florida
Statutes, to notify parties of any administrative hearing that is available
under Section 120.57, Florida Statutes, as well as the procedures and time
limits that apply. This notice should
not be construed to mean all requests for an administrative hearing will be
granted or result in the relief sought.
Mediation
may be available on a case-by-case basis.
If mediation is conducted, it does not affect a substantially interested
person’s right to a hearing.
The
action proposed herein is preliminary in nature. Any person whose substantial
interests are affected by the action proposed by this order may file a petition
for a formal proceeding, in the form provided by Rule 28-106.201, Florida
Administrative Code. This petition must
be received by the Office of Commission Clerk, 2540 Shumard Oak Boulevard,
Tallahassee, Florida 32399-0850, by the close of business on .
In
the absence of such a petition, this order shall become final and effective
upon the issuance of a Consummating Order.
Any
objection or protest filed in this/these docket(s) before the issuance date of
this order is considered abandoned unless it satisfies the foregoing conditions
and is renewed within the specified protest period.
