timely payment condition, are not
properly classified as “debts” under
the Bankruptcy Code. In the view
of the FCC, the financial nature of
a condition on a license did not
convert that condition to a debt. The
Supreme Court characterized this
argument as nothing more than
a retooling of the FCC’s argument
that “regulatory conditions” should
be exempt from Section 525.
The court again dismissed this
argument, saying “a debt is a debt,”
The FCC also argued that
Next Wave’s obligations were not
“dischargeable” in bankruptcy
because bankruptcy courts did not
have the jurisdictional authority to
alter regulatory obligations. 20 Noting
that dischargeability is not tied to the
existence of such authority, the court
stated that a preconfirmation debt is
dischargeable unless it falls within one
of the exceptions to dischargeability
contained in the Bankruptcy Code.
On several occasions, other courts
have also held that Section 525(a)
supersedes other provisions of the
Bankruptcy Code with respect to
government entities. 21 Turning
specifically to the interplay between
Section 525(a) and other provisions
of the Bankruptcy Code, courts
With regard to Gardens, it seems that the conditions
imposed by the California attorney general, albeit
seemingly consistent with Section 363(d)( 1), are in
violation of Section 525, and the latter should control.
continued on page 8
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