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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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November 29, 2018
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TO:
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Office of Commission Clerk (Stauffer)
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FROM:
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Office of Industry Development and Market
Analysis (Wooten)
Division of Economics
(McCoy)
Office of the General
Counsel (Dziechciarz)
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RE:
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Docket No. 20180205-TX – Bankruptcy
compliance cancellation by Florida Public Service Commission of CLEC
Certificate No. 8244, issued to Trans National Communications International,
Inc., effective December 31, 2018.
Docket No. 20180206-TC –
Bankruptcy compliance cancellation by Florida Public Service Commission of PATS
Certificate No. 5995, issued to Florida Gaming Centers, Inc., effective
December 31, 2018.
Docket No. 20180207-TX –
Bankruptcy compliance cancellation by Florida Public Service Commission of
CLEC Certificate No. 4847, issued to OneStar Long Distance, Inc., effective
December 31, 2018.
Docket No. 20180208-TX –
Bankruptcy compliance cancellation by Florida Public Service Commission of
CLEC Certificate No. 8382, issued to Baldwin County Internet/DSSI, L.L.C.,
effective December 31, 2018.
Docket No. 20180209-TX –
Bankruptcy compliance cancellation by Florida Public Service Commission of
CLEC Certificate No. 8748, issued to iNetworks Group, Inc., effective
December 31, 2018.
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AGENDA:
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12/11/18 – Regular Agenda – Proposed Agency Action – Interested
Persons May Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Administrative
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CRITICAL DATES:
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None
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SPECIAL INSTRUCTIONS:
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None
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Case Background
Pursuant
to Section 364.336, Florida Statutes (F.S.), telecommunications companies must
pay a minimum annual Regulatory Assessment Fee (RAF) if the company’s
certificate was active during any portion of the calendar year. Section
350.113, F.S. provides for penalties and interest on any delinquent amounts.
This recommendation addresses telecommunications companies that currently have
active certificates, but have entered either Chapter 11 bankruptcy proceedings
(addressed in Issue 1) or Chapter 7 bankruptcy proceedings (addressed in Issue
2). In a Chapter 11 bankruptcy proceeding, the daily operations of the company
continue while the company works to reorganize its business to become
profitable again. In a Chapter 7 bankruptcy proceeding, the
company stops all operations and goes completely out of business.
Trans National
Communications International, Inc. (Trans National) currently holds
competitive local exchange telecommunications company (CLEC) Certificate No.
8244, issued by the Commission on December 4, 2002. Trans National filed for
Chapter 11 bankruptcy on October 9, 2011, and the case was terminated on
January 26, 2016. Trans National has not paid its RAFs or the penalties and interest
assessed for the years 2014, 2015, 2016, 2017, and 2018.
Florida Gaming
Centers, Inc. (Florida Gaming) currently holds pay telephone service (PATS)
Certificate No. 5995, issued by the Commission on February 16, 1999. Florida Gaming filed
for Chapter 11 bankruptcy on August 19, 2013, and the case was terminated on
August 22, 2017. Florida Gaming has not paid its RAFs or the penalties and interest
assessed for the years 2014, 2015, 2016, 2017, and 2018.
OneStar Long
Distance, Inc. (OneStar) currently holds CLEC Certificate No. 4847,
issued by the Commission on May 9, 2003. OneStar filed for Chapter 11 bankruptcy on December 31,
2003, but RAFs have not been assessed for OneStar since January 13, 2005, when the
company converted to Chapter 7 bankruptcy.
Baldwin County
Internet/DSSI Service, L.L.C. (Baldwin County) currently holds CLEC
Certificate No. 8382, issued by the Commission on September 17, 2003. Baldwin County filed for Chapter
11 bankruptcy on April 26, 2012. RAFs have not been assessed for Baldwin County
since October 15, 2012, when the company converted to Chapter 7 bankruptcy.
iNetworks Group,
Inc. (iNetworks) currently holds CLEC Certificate No. 8748, issued by
the Commission on March 6, 2009. RAFs have not been assessed on iNetworks since
August 11, 2017, when the company filed for Chapter 7 bankruptcy.
The Commission has
jurisdiction over these matters pursuant to Section 364.336, F.S.
Discussion
of Issues
Issue 1:
Should the Commission, on its own motion, cancel
Trans National Communications International, Inc.’s CLEC certificate and
Florida Gaming Centers, Inc.’s PATS certificate and service schedules (if any) for failure to
pay Regulatory Assessment Fees following discharge from Chapter 11 bankruptcy;
change the companies’ status to “cancelled” in the Master Commission Directory
effective
December 31, 2018; direct the Division of Administrative and Information
Technology Services (AIT) to write off any statutory late payment charges,
penalties and interest instead of requesting collection services; and require
the companies to immediately cease and desist providing telecommunications
services in Florida?
Recommendation:
Yes, the Commission, on its own motion, should
cancel Trans National Communications International, Inc.’s CLEC certificate and
Florida Gaming Centers, Inc.’s PATS certificate and service schedules (if any)
for failure to pay Regulatory Assessment Fees following discharge from Chapter
11 bankruptcy. The Commission should change the companies’ status to
“cancelled” in the Master Commission Directory, effective December 31, 2018;
direct AIT to write off any statutory late payment charges, penalties and interest
instead of requesting collection services; and require the companies to
immediately cease and desist providing telecommunications services in Florida. (Wooten,
McCoy)
Staff Analysis:
Staff searches of
the Public Access to Court Electronic Records (PACER) system show that on
October 9, 2011, Trans National filed for Chapter 11 bankruptcy in the U.S.
Bankruptcy Court for the District of Massachusetts. The bankruptcy case was closed
on January, 26, 2016. Trans National has not paid the RAFs, or the late
penalties and interest assessed for the years 2014, 2015, 2016, 2017, and 2018.
Trans National has
not responded to staff’s requests to update contact information or data
requests. Staff reviewed Trans National’s records on the Florida Department of
State, Division of Corporations website, which show that the company’s last
annual report was filed on April 12, 2013, and that its corporate status was
listed as “inactive” as of February 6, 2014. The Federal Communications
Commission (FCC) Form 499 Filer Database lists Trans National as no longer
active as of April 30, 2013.,
Staff searches of
the PACER system show that on August 19, 2013, Florida Gaming filed for Chapter
11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of
Florida, and that the bankruptcy case was closed on August 22, 2017. Florida
Gaming has not paid the RAFs or the late penalties and interest assessed for
the years 2014, 2015, 2016, 2017, and 2018.
Florida Gaming has
not responded to staff’s requests to update contact information or data
requests. All mail sent by staff has been returned by the U.S. Postal Service
marked “not deliverable as addressed,” and the telephone numbers on file for
the company are out of service. Staff reviewed Florida Gaming’s records on the Florida
Department of State, Division of Corporations website, which show that the
company’s last annual report was filed on April 16, 2014, and its corporate
status was listed as “inactive.” On September 25, 2015, the company’s status
was listed as “administrative dissolution for annual report.” The FCC Form 499
Filer Database has no listing for Florida Gaming.
Pursuant to Chapter 11 U.S. Code §362(a), the
filing of a petition for Chapter 11 bankruptcy relief acts as an automatic stay
that enjoins a governmental entity from exercising its regulatory authority to
collect a pre-petition debt.
Additionally, 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 the
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. Therefore, this
Commission would be prevented from collecting pre-bankruptcy RAFs owed by these
companies, and from assessing and collecting a penalty for failure to pay the
fees.
While the Commission is enjoined from
collecting pre-petition debts, companies in Chapter 11 bankruptcy are required
to pay post-petition expenses as incurred.
Trans National and Florida Gaming have both exited bankruptcy, but neither has
paid any RAFs for any years after declaring and after exiting bankruptcy.
Furthermore, as indicated above, it appears that the companies are no longer
providing service in Florida.
Pursuant to
Section 364.336, F.S., certificate holders must pay a minimum annual RAF if the
certificate was active during any portion of the calendar year. Section
350.113, F.S. provides for penalties and interest on for any delinquent
amounts.
AIT advised
that it appears Trans National and Florida Gaming have failed to comply with
Section 364.336, F.S., following their discharge from Chapter 11 bankruptcy. The companies have not paid RAFs or statutory
late payment charges as detailed in Attachment A. Therefore, staff recommends
that the Commission, on its own motion, cancel Trans National’s CLEC
certificate and Florida Gaming’s PATS certificate and service schedules (if
any) for failure to pay RAFs following the companies’ discharge from Chapter 11 bankruptcy. Staff
recommends that the companies’ status be changed to “cancelled” in the Master
Commission Directory, effective December 31, 2018, and that AIT be directed
to write off any statutory late payment charges, penalties, and interest
instead of requesting collection services. Staff further recommends that the
Commission should require the companies to immediately cease and desist
providing telecommunications services in Florida.
Issue 2:
Should the Commission, on its own motion, cancel
OneStar Long Distance, Inc., Baldwin County Internet/DSSI Service, L.L.C., and
iNetworks Group, Inc.’s CLEC certificates and service schedules (if any)
because of the companies’ status as Chapter 7 bankruptcy liquidations; change
the companies’ status to “cancelled” in the Master Commission Directory
effective December
31, 2018; and require the companies to immediately cease and desist
providing telecommunications services in Florida?
Recommendation:
Yes, the Commission, on its own motion, should
cancel OneStar Long Distance, Inc., Baldwin County Internet/DSSI Service,
L.L.C., and iNetworks Group, Inc.’s CLEC certificates and service schedules (if
any) because of the companies’ status as Chapter 7 bankruptcy liquidations;
change the companies’ status to “cancelled” in the Master Commission Directory
effective December
31, 2018; and require the companies to immediately cease and desist
providing telecommunications services in Florida (Wooten, McCoy)
Staff Analysis:
Staff searches of
the PACER system show that OneStar Long Distance, Inc., Baldwin County
Internet/DSSI Service, L.L.C., and iNetworks are currently in Chapter 7
bankruptcy. According to the U.S. Securities and Exchange Commission, “(U)nder Chapter 7, the company stops all operations and goes completely
out of business. A trustee is appointed to "liquidate" (sell) the
company's assets and the money is used to pay off the debt, which may include
debts to creditors and investors.”,
A
company undergoing Chapter 7 bankruptcy proceedings will no longer be able to
serve its customers or to meet its obligations as the holder of a certificate
of authority. Upon notification that a
company has initiated a Chapter 7 bankruptcy case, the Commission ceases to
bill for RAFs, and does not assess any penalties or interest, because RAFs owed are not secured debts and, as a practical
matter, are uncollectible.
Therefore, staff recommends that the Commission, on its own motion,
should cancel OneStar Long Distance, Inc., Baldwin County Internet/DSSI
Service, L.L.C., and iNetworks Group, Inc.’s CLEC certificates and service
schedules (if any) because of the companies’ status as Chapter 7 bankruptcy
liquidations; change the companies’ status to “cancelled” in the Master
Commission Directory effective December 31, 2018; and require the companies
to immediately cease and desist providing telecommunications services in
Florida.
Issue 3:
Should this docket be closed?
Recommendation:
Yes, if no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, these dockets should be closed upon the issuance of a
consummating order. If a protest is filed in one docket, the protest should not
prevent the action in a separate docket from becoming final. These dockets
should then be closed upon issuance of a consummating order. (Dziechciarz)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, these dockets should be closed upon the issuance of a
consummating order. If a protest is filed in one docket, the protest should not
prevent the action in a separate docket from becoming final. These dockets
should then be closed upon issuance of a consummating order.
