Case Background
This
recommendation addresses a telecommunications company with an active
certificate of authority that has completed Chapter 7 bankruptcy proceedings.
In a Chapter 7 bankruptcy proceeding, the company stops all operations and goes
completely out of business.[1]
Pursuant to
Section 364.335(2), Florida Statutes (F.S.), applicants for certificates of
authority must “. . . ensure continued compliance with applicable business
formation, registration, and taxation provisions of law.” A liquidated company
would be unable to comply with these requirements.
Discount CLEC
Services Corporation currently holds CLEC Certificate No. 8867,
issued by the Commission on July 24, 2015. The company filed for Chapter 11 bankruptcy on September
14, 2016. On March 21, 2017, the bankruptcy type was converted to Chapter 7
bankruptcy, and on July 27, 2018, the case was decreed to have been fully
administered.
The Commission
has jurisdiction over this matter pursuant to Chapter 364, including Sections
364.01 and 364.335, F.S.
Discussion
of Issues
Issue 1:
Should the
Commission, on its own motion, cancel Discount CLEC Services Corporation’s CLEC
certificate and service schedules (if any) due to the company’s Chapter 7
bankruptcy liquidation?
Recommendation:
Yes, the Commission, on its own motion, should
cancel Discount CLEC Services Corporation’s CLEC certificate and service
schedules (if any) due to the company’s Chapter 7 bankruptcy liquidation
effective upon
the issuance of a final order in this docket. (Wooten, Nave)
Staff Analysis:
The Public Access to Court Electronic Records system shows that
Discount CLEC Services Corporation completed a Chapter 7 bankruptcy liquidation
on July 27, 2018.[2]
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.”[3],[4]
A company that has undergone Chapter 7 bankruptcy proceedings will no longer be
able to serve its customers or meet its obligation to maintain continued
compliance with applicable business formation, registration, and taxation
provisions of law.
The Florida Department of State, Division of Corporations website shows
that the company filed its last annual report on October 30, 2018, and the
company’s status is listed as “inactive” as of September 27, 2019.[5]
The Federal Communications Commission Form 499 Filer Database lists the company
as no longer active as of March 31, 2018.[6],[7]
Discount CLEC
Services Corporation did not have any outstanding Regulatory Assessment
Fees (RAFs) when its bankruptcy was converted to a Chapter 7 proceeding. Upon
notification that a company has entered into a Chapter 7 bankruptcy case, the
Commission ceases to bill for RAFs, because RAFs owed are not secured debts and, as a practical matter, are uncollectible.
Staff recommends that the Commission, on its own motion,
cancel Discount CLEC Services Corporation’s CLEC certificate and service
schedules (if any) due to the company’s Chapter 7 bankruptcy liquidation
effective upon the issuance of a final order in this docket.
Issue 2:
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, this docket should be closed upon the issuance of a
consummating order. (Sparks, Marquez)
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, this docket should be closed upon the issuance of a
consummating order.
