Open Range trustee requests approval of escrow, U.S. claims settlement

By Caroline Salls

Pittsburgh, Nov. 21 - Open Range Communications, Inc.'s Chapter 7 trustee requested court approval of a settlement reached with the United States of America, Velocitel, Inc., Alvarion, Inc. and G4S Technology, LLC, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The United States entered the settlement on behalf of the United States Department of Agriculture, Rural Utilities Service (the RUS) and the Federal Communications Commission.

Chapter 7 trustee Charles M. Forman said the settlement remains subject to finalization of language and approvals by high officials within the Department of Justice.

The trustee said the settlement resolves litigation related to $5 million held in an escrow account that five separate parties have asserted an interest in and claims filed by the trustee, Velocitel, Alvarion and G4S against the United States stemming from the United States' alleged involvement in the company's financial difficulties and eventual bankruptcy.

Settlement terms

The terms of the settlement include the following:

• The United States will receive $1.75 million from Open Range estate on account of an RUS secured claim, a retained reserve if the United States prevails on G4S's crossclaim in escrow litigation, 37.5% of any recovery of litigation proceeds from the trustee's litigation pending against One Equity Partners III, LP, OEP Open Range Holdings, LLC and some former Open Range directors, 50% of any recovery from the sale of specified web addresses, 25% of any recovery of preference action litigation proceeds, a $68 million unsecured claim on account of RUS' unsecured deficiency claim and dismissal of claims against the United States;

• Alvarion will receive no distribution from the escrow funds, a $23.71 million general unsecured claim, release of an Alvarion bond from the trustee and full mutual clam and cause of action releases;

• Velocitel will receive $2.4 million on account of its claim to the escrow fund, a $3.24 million general unsecured claims and full claim and cause of action releases;

• If G4S is successful in its surviving crossclaim against the United States, it will receive the lesser of the amount of a final judgment in its favor or $437,258, payable from the escrow funds.

G4S will also receive a $12.7 million general unsecured claim and a claim and cause of action release; and

• The trustee will receive any remaining funds in the escrow and any specified cash on hand, which currently totals $1.54 million, 62.5% of any recovery of net litigation proceeds from the OEP litigation, 50% of any net recovery from the sale of web addresses, 75% of any net recovery of litigation proceeds from preference actions and claim, cause of action and property lien releases.

A hearing is scheduled for Dec. 12.

Open Range is a Greenwood Village, Colo.-based broadband company that filed for bankruptcy on Oct. 6, 2011. Its Chapter 11 case number is 11-13188.

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