Open Range Communications gets court OK for asset auction Jan. 11-12

By Jim Witters

Wilmington, Del., Dec. 22 -Open Range Communications Inc. received court approval Thursday to conduct an auction on Jan. 11 and Jan. 12 for its assets.

During a hearing in the U.S. Bankruptcy Court for the District of Delaware, Open Range overcame objections from software supplier Alvarion, Inc.

Alvarion supplied the software used in Open Range's modems and base stations. Under the licensing agreement, Alvarion sought to force Open Range to remove any chips containing Alvarion software before selling the equipment.

Adam Rice, the Open Range auctioneer, said such a requirement would be nearly impossible to implement before the sale and would severely reduce the value of the equipment.

As previously reported, the company's stalking horse bidder withdrew its offer for substantially all of Open Range's assets about an hour before the sale hearing was scheduled to begin in November.

The company said an auction is the only way to determine the market value of its assets and recoup the maximum value.

Compromise sought

Debtors' attorney Marion Quirk proposed issuing a disclaimer with the equipment stating that the winning bidders were buying the equipment only and not the licenses to use the software on the equipment, according to court documents.

Alvarion attorney Mark Salzberg argued that merely flipping the "on" switch on the equipment launches the software.

Judge Kevin Carey said the disclaimer would not be strong enough. He recessed the hearing for three hours while the parties negotiated.

Agreement reached

Rice suggested during the recess that each bidder be required to agree to and sign a prohibition against use of the Alvarion software or firmware on the equipment without reaching agreement with Alvarion for its use.

Carey's final order includes language that requires any purchaser of Open Range equipment to agree to the terms and conditions before receiving the equipment.

Auction procedures

Under the procedures approved by the court

• All core and non-core assets will be sold;

• The auction will be conducted on an asset-by-asset basis, in lots or in combinations, at the discretion of the debtors and the auctioneers;

• The auction will be conducted on-site and over the internet;

• No bids may contain any financing, due diligence or "material adverse change" contingencies;

• Qualified bidders may submit bids to the auctioneer before the auction and authorize the auctioneer to make that bid at the auction;

• Current and former insiders may bid on non-core assets; and

• All sales are "as is, where is, and with all faults."

Heritage Global Partners, Inc. and RB Capital, LLC are the auctioneers.

Open Range is a Greenwood Village, Colo.-based broadband company that filed for bankruptcy on Oct. 6. Its Chapter 11 case number is 11-13188.

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