IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT


                            No. 99-11294


     IN THE MATTER OF: GWI PCS 1 INC;
     GWI PCS 2 INC; GWI PCS 3 INC;
     GWI PCS 4 INC; GWI PCS 5 INC;
     GWI PCS 6 INC; GWI PCS 7 INC;
     GWI PCS 8 INC; GWI PCS 9 INC;
     GWI PCS 10 INC; GWI PCS 11 INC;
     GWI PCS 12 INC; GWI PCS 13 INC;
     GWI PCS 14 INC; GENERAL WIRELESS INC;
     GWI PCS INC,

                                           Debtors,

          versus

     UNITED STATES OF AMERICA, on behalf of
     FEDERAL COMMUNICATIONS COMMISSION,

                                           Appellant,

          versus

     IN THE MATTER OF: GWI PCS 1 INC;
     GWI PCS 2 INC; GWI PCS 3 INC;
     GWI PCS 4 INC; GWI PCS 5 INC;
     GWI PCS 6 INC; GWI PCS 7 INC;
     GWI PCS 8 INC; GWI PCS 9 INC;
     GWI PCS 10 INC; GWI PCS 11 INC;
     GWI PCS 12 INC; GWI PCS 13 INC;
     GWI PCS 14 INC; GENERAL WIRELESS INC;
     GWI PCS INC,

                                           Appellees.

           Appeal from the United States District Court
                for the Northern District of Texas

                          October 20, 2000

Before GARWOOD, WIENER, and DeMOSS, Circuit Judges.
GARWOOD, Circuit Judge:
     The Federal Communications Commission (FCC), on behalf of the

United States, appeals from the district court’s judgment affirming a
bankruptcy reorganization plan for debtors General Wireless, Inc. (GWI),

GWI PCS, Inc. (GWI PCS), and GWI PCS 1, GWI PCS 2, GWI PCS 3, GWI PCS

4, GWI PCS 5, GWI PCS 6, GWI PCS 7, GWI PCS 8, GWI PCS 9, GWI PCS 10,

GWI PCS 11, GWI PCS 12, GWI PCS 13, GWI PCS 14 (the subsidiary debtors),

(collectively, the Debtors). The reorganization plan included an order

that the subsidiary debtor’s and GWI PCS’s obligation to pay $954

million to the FCC, evidenced by promissory notes signed by the

subsidiary debtors, as part of GWI PCS’s winning bids for fourteen

radio-spectrum licenses at an FCC auction, was a constructive fraudulent

transfer under 11 U.S.C. § 548. The bankruptcy court therefore avoided

approximately $894 million of the $954 obligation to the FCC and allowed

the subsidiary debtors to retain the licenses. The FCC now appeals the

avoidance judgment, arguing that its appeal of the avoidance judgment

is not equitably moot and that the bankruptcy court improperly assumed

the FCC’s regulatory authority and erred in avoiding $894 million of the

obligation to the FCC.    We affirm.

                     Facts and Proceedings Below

     In 1993, Congress passed several amendments to the Federal

Communications Act (FCA), including section 309(j). See Omnibus Budget

Reconciliation Act of 1993, Pub. L. No. 103-66, § 6002(a), 107 Stat.

312, 387 (1993).      Section 309(j) authorized the FCC to sell

electromagnetic licenses for personal communications services (PCS) to

private companies by auction. Section 309(j) also required the FCC to

design auctions that “ensure that small businesses, rural telephone


                                   2
companies, and businesses owned by members of minority groups and women

are given the opportunity to participate in the provision of spectrum-

based services.”     47 U.S.C. § 309(j)(4)(D); see 47 U.S.C. §

309(j)(3)(B). To further this directive, the FCC reserved the C and F-

blocks of the electromagnetic spectrum1 for auction to small,

entrepreneurial companies referred to as “designated entities.” See 47

C.F.R. § 24.709 (1995).

     The C-block auction began in December 1995 and ended on May 6,

1996.    On December 18, 1995, GWI made the initial payment of

approximately $53 million to qualify GWI PCS, a subsidiary of GWI, to

bid at the C-block auction.2 At the conclusion of the C-block auction,

GWI PCS was the high bidder for fourteen PCS licenses, covering areas

in Southern Florida, Northern California, and Atlanta, Georgia. See In

re Applications of GWI PCS, Inc., 12 F.C.C.R. 6441 ¶ 2, 

     1
         The megahertz of radio frequency determines the carrying
capacity of a block of wireless spectrum, and the FCC had divided the
electromagnetic spectrum allocated to PCS licenses into “blocks”
designated as the A, B, C, D, E, and F-blocks. The A, B, and C-blocks
consist of 30 megahertz of spectrum, while the D, E, and F-blocks of 10.
Another measurement, a “pop”, represents 1000 persons within the
geographic area covered by a particular licensing block. Dollars per
megahertz-pop, a generally accepted industry measurement standard,
represents the amount paid for a license that would allow the provision
of a particular level of communications data to a particular number of
people.
     2
        As part of the FCC’s C-block auction rules, bidders were
required to deposit “qualifying amounts” in order to participate in the
auction. See 47 C.F.R. § 24.711(a)(1) (1995) (“Each eligible bidder for
licenses on frequency Block C subject to auction shall pay an upfront
payment of $0.015 per MHz per pop for the maximum number of licenses (in
terms of MHz-pops) on which it intends to bid pursuant to § 1.2106 of
this chapter and procedures specified by Public Notice.”).

                                   3
(Jan. 27, 1997). GWI PCS’s winning bids were each approximately five

percent higher than the next-highest bid and totaled approximately $1.06

billion.3 On May 22, 1996, GWI PCS filed license application forms for

the fourteen licenses.    See 47 C.F.R. § 24.707 (1995)4. On May 31,

1996, the FCC released a public notice accepting GWI PCS’s applications

for the licenses and setting July 1, 1996 as the cut-off date for

parties in interest to file objections, pursuant to 47 C.F.R. § 24.830

(1995), to GWI PCS receiving the licenses. See In re Applications of

GWI PCS, Inc., 12 F.C.C.R. 6441 ¶ 2, 

(Jan. 27, 1997).

Two parties did object, contending that GWI PCS had violated the foreign

ownership restrictions, see 47 U.S.C. § 310(b), 47 C.F.R. § 24.804(b)

(1995), and the rules against collusive bidding, see 47 C.F.R. §

1.2105(c) (1995)5. See In re Applications of GWI PCS, Inc., 12 F.C.C.R.


     3
        The C-block auction resulted in the awarding of 493 C-block
licenses to approximately 90 designated entities for a total bid amount
of approximately $10.2 billion.
     4
        47 C.F.R. § 24.707 states as follows:
          “Each winning bidder will be required to submit a long-
     form application on FCC Form 600, as modified, within ten
     (10) business days after being notified that it is the
     winning bidder. Applications on FCC Form 600 shall be
     submitted pursuant to the procedures set forth in Subpart I
     of this Part and § 1.2107 (c) and (d) of this Chapter and any
     associated Public Notices.      Only auction winners (and
     applicants seeking partitioned licenses pursuant to
     agreements with auction winners under § 24.714) will be
     eligible to file applications on FCC Form 600 for initial
     broadband PCS licenses in the event of mutual exclusivity
     between applicants filing Form 175. Winning bidders need not
     complete Schedule B to Form 600.”
     5
        47 C.F.R. § 24.701 provides that the competitive bidding
procedures for broadband PCS incorporate “[t]he general competitive

                                   4
6441 ¶ 4, 

(Jan. 27, 1997). After investigating the bases

for the objections, the FCC concluded that GWI PCS did not exceed the

foreign ownership limitations and that there was insufficient evidence

to find that GWI PCS had violated the FCC’s rules prohibiting collusion

in the bidding process.    See 

     On January 27, 1997, the FCC approved the granting of the fourteen

licenses for which GWI PCS was the high bidder.           See Wireless

Telecommunications Bureau Announces Grant of Broadband Personal

Communications Services Entrepreneurs’ C Block Licenses to GWI PCS Inc.,

12 F.C.C.R. 1215, 

(Jan. 27, 1997). At GWI’s request, each

license was conditionally transferred to one of the fourteen subsidiary

debtors.6 See 

On February 3, 1997, GWI paid the second

half of the down-payment, $53 million, for the licenses on behalf of the

subsidiary debtors. On March 10, 1997, the fourteen subsidiary debtors

executed notes to the FCC for amounts totaling approximately $954

million–the sum of the winning bids for the fourteen licenses less the

ten percent in down-payments made by GWI. The notes were sent to the



bidding procedures found in 47 CFR Part 1, Subpart Q . . . unless
otherwise provided in [47 C.F.R. Part 24, Subpart H].”
     6
        Pursuant to the FCC regulations issued under 47 U.S.C. § 309(j),
winning bidders that were “small businesses” were required to pay only
10 percent of their winning bids in cash; the remaining 90 percent could
be paid in installments over a ten-year period at below market interest
rates. See 47 C.F.R. §§ 1.2110(e), 24.711(b) (1995). The transfer of
the licenses remained contingent on the subsidiary debtors signing the
notes and the depositing of the remaining 5 percent of the down-payment;
however, upon the execution of the notes on March 10, 1997, the licenses
became effective as of January 27, 1997.

                                   5
FCC by Federal Express on March 13, 1997 and were received by the FCC

on March 14, 1997.

     In early 1997, a significant number of C-block licensees,

experiencing difficulties in securing financing and facing the prospect

of early default on their installment payments to the FCC, petitioned

the FCC for relief from their licenses’ installment payments.7       In

February 1997, the FCC suspended the C-block installment payments and

commenced rule-making proceedings to address the problems faced by C-

block licensees. Following six months of administrative proceedings,

the FCC issued an order on October 16, 1997, the Restructuring Order,

that provided C-block licensees with several options to ease their

financial difficulties, including allowing a licensee to return all or

portions of a license to the FCC in exchange for significant debt



     7
        These difficulties were generally limited to the winning bidders
at the C-block auction, because the winning bids at the A, B, D, E, and
F-block auctions were considerably lower than the winning bids at the
C-block auction when measured in dollars per megahertz-pop, see supra
note 1. The average winning bid at the A and B-block auctions held in
March 1995 was $.50 per megahertz-pop. At the D, E, and F-block
auctions concluded in January 1997, the average winning bid for the D
and E-blocks, in cash, was approximately $.35 per megahertz-pop, and for
the F-blocks, which like the C-block auction was reserved for qualified
entities and thus subject to favorable ten-year financing, was $.25 per
megahertz-pop. In contrast, the average winning bid at the C-block
auction in May 1996 was considerably higher per megahertz-pop. One of
the reasons proffered for the steep decline in the value of C-block
licenses after the May 1996 auction was the FCC’s decision to auction
the D, E, and F-blocks after the C-block auction was concluded but
before the C-block licenses were to be issued, thereby greatly
increasing the volume of licenses soon to be available for purchase at
auction. For a general survey of the difficulties facing C-block
licensees, see Carolyn Hochstadter Dicker, PCS Licenses and the
“Specter” of Bankruptcy, 6 COMMLAW CONSPECTUS 59 (1998).

                                   6
reduction. See In re Amendment of the Commission’s Rules Regarding

Installment Payment Financing for Personal Communications Services (PCS)

Licenses, 12 F.C.C.R. 16436, 

(Sept. 25, 1997). The FCC,

however, expressly rejected proposals that would have allowed licensees

to retain their licenses without paying their winning bids in full,

because, in the FCC’s view, the C-block auction had been designed to

ensure that the licenses were to be allocated to users who could

demonstrate, through their ability to pay the highest price, that they

possessed the most highly valued use for the licenses. See 

In   response   to   numerous   requests   for   reconsideration   of   the

Restructuring Order, the FCC altered the Restructuring Order slightly

in March 1998 to allow licensees greater flexibility in making their

decisions regarding the options provided in the Restructuring Order;

however, the basic framework of the Restructuring Order was retained.

See In re Amendment of the Commission’s Rules Regarding Installment

Payment Financing for Personal Communications Services (PCS) Licenses,

13 F.C.C.R. 8345, 

(Mar. 23, 1998).

      The subsidiary debtors did not elect to pursue one of the options

for relief presented by the FCC in the Restructuring Order. Instead,

on October 20, 1997, the subsidiary debtors filed voluntary bankruptcy

petitions under chapter 11 in the Northern District of Texas.            On

October 29, 1997, the subsidiary debtors initiated an adversary

proceeding against the FCC, in part to avoid their payment obligations

under the promissory notes executed in March 1997 on the basis that


                                     7
those obligations constituted constructive fraudulent transfers for

which the subsidiary debtors had received less than reasonably

equivalent value, i.e., the licenses were worth less than the notes, and

had become insolvent as a result. On January 26, 1998, GWI and GWI PCS

also filed for bankruptcy protection, and their chapter 11 cases were

consolidated with those of the fourteen subsidiary debtors.       In an

amended complaint, GWI and GWI PCS joined the adversary proceeding

against the FCC, seeking to avoid any obligation that they may have

incurred to pay the balance of the bid price to the FCC.        The FCC

defended against the Debtors’ attempt to avoid the obligations by

arguing, inter alia, that the value of the licenses received by the

Debtors should be measured as of the date the C-block auction closed,

May 8, 1996, and that the sixteen GWI entities should be collapsed and

treated as a single entity. In addition, the FCC maintained that, if

the bankruptcy court allowed the subsidiary debtors to retain the

licenses without paying the bid price, the FCC’s regulatory authority

will be effectively usurped through the bankruptcy proceeding and the

terms of license ownership as set forth in FCC regulations will be

improperly altered through bankruptcy.

     After conducting a trial on the adversary proceeding from April 13,

1998 through April 17, 1998, the bankruptcy court in a bench ruling on

April 24, 1998 granted the relief sought by the Debtors. The bankruptcy

court found that, although the value of the fourteen C-block licenses

on the date the auction closed, May 8, 1996, was $1.06 billion, the


                                   8
licenses’ value had declined to $166 million by January 27, 1997,8 the

date the FCC conditionally granted the licenses to the subsidiary

debtors who then became obligated to pay the remaining balance of GWI

PCS’s bids.9   In addition, the bankruptcy court found that when the

subsidiary debtors executed the notes, they held assets totaling $2

million plus the fourteen licenses valued at $166 million with debts,

represented by the notes, of approximately $954 million, thereby

rendering the subsidiary debtors insolvent. The bankruptcy court also

ruled that the GWI corporations were all separate legal entities,

declining to treat them as one under the FCC’s alter ego theory10, and

     8
       The bankruptcy court found that the licenses dropped in value
to between $132 million and $200 million and appears to have simply
split the difference in arriving at the $166 million figure.
     9
        The bankruptcy court also determined that the value of the
licenses did not change between January 27, 1997 and March 14, 1997; and
that therefore, whether the transfer of the licenses from the FCC to the
subsidiary became effective on January 27, 1997–the date the licenses
were awarded–or on March 14, 1997–the date the notes securing the
obligation to pay the remaining $954 million were received by the
FCC–was of no moment to the value of the licenses for purposes of
avoidance.
     10
       With regard to this conclusion, the bankruptcy court stated as
follows in its oral ruling:
     “The separate corporations, all being separate legal
     entities, shall not be considered the alter ego of the parent
     debtor. The debtors perpetuated no sham or fraudulent
     transaction on the government. Indeed, the debtors acted in
     good faith, following all FCC regulations and rules. The
     government has not established the applicability of any
     common law alter ego theory.

     The government contends, however, that federal case law
     recognizes situations when corporate form should be ignored,
     if necessary, to preserve or protect some public policy.

     . . .

                                   9
refused to set the date the auction closed, May 8, 1996, as the date to

evaluate the transfer of the licenses, because the bankruptcy court

reasoned that it was not until January 27, 1997 that the licenses were

issued by the FCC and the transfer completed. Thus, January 27, 1997

became the date for determining avoidability of the notes.              The

bankruptcy court therefore ruled that the obligation incurred to the FCC

above the actual value of the licenses on January 27, 1997, or $894

million, was a constructive fraudulent transfer, avoidable under 11
                                                          1   1
U   .        S   .   C   .        §           5   4   8           .


             As the Court has found, there is no evidence of a fraud
        or that the corporate structure was used as a sham. GWI had
        legitimate business purposes for the use of the corporate
        form, which the FCC recognized as common and approved. The
        subsidiaries were not created to be a conduit or agent . .
        ., but to be operating entities in their respective areas of
        the country. This Court should, therefore, honor the
        separate corporate entities.”

Before the bankruptcy court, the FCC sought to hold GWI responsible for
the notes and bids under an alter ego theory.          As GWI did not
participate in the actual bidding at the C-block auction and did not
sign any promissory notes, in the absence of alter ego, GWI incurred no
obligation towards the unpaid balance of the bid price. The FCC did not
appeal the foregoing finding to the district court and does not raise
it before this Court.
        11
             11 U.S.C. § 548, prior to being amended in 1998, stated as
follows:
             “(a) The trustee may avoid any transfer of an interest
        of the debtor in property, or any obligation incurred by the
        debtor, that was made or incurred on or within one year
        before the date of the filing of the petition, if the debtor
        voluntarily or involuntarily–
                         (1) made such transfer or incurred such
                   obligation with actual intent to hinder, delay, or
                   defraud any entity to which the debtor was or
                   became, on or after the date that such transfer
                   was made or such obligation was incurred,
                   indebted; or

                                      10
                 (2)(A) received less than a reasonably
           equivalent value in exchange for such transfer or
           obligation; and
                      (B)(i) was insolvent on the date that
                 such transfer was made or such obligation
                 was incurred, or became insolvent as a
                 result of such transfer or obligation;
                            (ii) was engaged in business or a
                      transaction, or was about to engage in
                      business or a transaction, for which
                      any property remaining with the debtor
                      was an unreasonably small capital; or
                            (iii) intended to incur, or
                      believed that the debtor would incur,
                      debts that would be beyond the
                      debtor's ability to pay as such debts
                      matured.
      (b) The trustee of a partnership debtor may avoid any
transfer of an interest of the debtor in property, or any
obligation incurred by the debtor, that was made or incurred
on or within one year before the date of the filing of the
petition, to a general partner in the debtor, if the debtor
was insolvent on the date such transfer was made or such
obligation was incurred, or became insolvent as a result of
such transfer or obligation.
      (c) Except to the extent that a transfer or obligation
voidable under this section is voidable under section 544,
545, or 547 of this title, a transferee or obligee of such
a transfer or obligation that takes for value and in good
faith has a lien on or may retain any interest transferred
or may enforce any obligation incurred, as the case may be,
to the extent that such transferee or obligee gave value to
the debtor in exchange for such transfer or obligation.
      (d)(1) For the purposes of this section, a transfer is
made when such transfer is so perfected that a bona fide
purchaser from the debtor against whom applicable law permits
such transfer to be perfected cannot acquire an interest in
the property transferred that is superior to the interest in
such property of the transferee, but if such transfer is not
so perfected before the commencement of the case, such
transfer is made immediately before the date of the filing
of the petition.
           (2) In this section–
                 (A) ‘value’ means property, or satisfaction
           or securing of a present or antecedent debt of the
           debtor, but does not include an unperformed
           promise to furnish support to the debtor or to a

                             11
The bankruptcy court similarly avoided GWI PCS’s obligation to the FCC,

reasoning that GWI PCS did not incur any obligation to pay the remainder

of the $1.06 billion auction price for the licenses until the remaining

five percent down-payment was made, the formal application for the

licenses was submitted, and the licenses were obtained after the FCC’s

regulatory process and review.      Therefore, the bankruptcy court

concluded that GWI PCS’s obligation to pay the remainder of the bid

price was not incurred until January 27, 1997. The bankruptcy court

also rejected the FCC’s argument that non-payment of the entire

obligation resulted in cancellation of the licenses. On June 4, 1998,

the bankruptcy court entered judgment on the avoidance claim12, reducing


                relative of the debtor;
                     (B) a commodity broker, forward contract
                merchant, stockbroker, financial institution, or
                securities clearing agency that receives a margin
                payment, as defined in section 101(34), 741(5), or
                761(15) of this title, or settlement payment, as
                defined in section 101(35) or 741(8) this title,
                takes for value to the extent of such payment;
                     (C) a repo participant that receives a
                margin payment, as defined in section 741(5) or
                761(15) of this title, or settlement payment, as
                defined in section 741(8) of this title, in
                connection with a repurchase agreement, takes for
                value to the extent of such payment; and
                     (D) a swap participant that receives a
                transfer in connection with a swap agreement takes
                for value to the extent of such transfer.” 11
                U.S.C. § 548 (1996).
     12
       In its final judgment on the avoidance claims, the bankruptcy
court ordered, in relevant part, that:
     “1. the obligations that GWI PCS, Inc. (“PCS”) incurred to
          the United States, acting through the Federal
          Communications Commission (“FCC”), on May 8, 1996 are
          not avoided because as of that date, PCS received
          reasonably equivalent value in exchange for those

                                   12
the remaining payment obligations for the fourteen licenses from

approximately $954 million to $60 million13, which amount is secured by

the licenses.14   The FCC then appealed the avoidance order to the

district court, maintaining that the Debtors remained obligated for the

full face value of the notes and that the bankruptcy court erred in


           obligations;
     2.    the obligations that GWI PCS 1, Inc., GWI PCS 2, Inc.,
           GWI PCS 3, Inc., GWI PCS 4, Inc., GWI PCS 5, Inc., GWI
           PCS 6, Inc., GWI PCS 7, Inc., GWI PCS 8, Inc., GWI PCS
           9, Inc., GWI PCS 10, Inc., GWI PCS 11, Inc., GWI PCS
           12, Inc., GWI PCS 13, Inc., and GWI PCS 14, Inc. (the
           “Subsidiary Debtors”) and PCS incurred to the United
           States, acting through the FCC, on January 27, 1997 are
           avoided pursuant to 11 U.S.C. § 548(a)(2)(A) and (B)(i)
           & (ii), because the Subsidiary Debtors and PCS did not
           receive reasonably equivalent value in exchange for
           these obligations, and on this date, the Subsidiary
           Debtors and PCS were or became insolvent and were
           undercapitalized for the contemplated business activity
           they intended to pursue;
     3.    pursuant to 11 U.S.C. § 548(c), the obligations of PCS
           and the Subsidiary Debtors to the United States are
           reduced to a $60 million, which amount is the
           difference between the value of the obligations as of
           January 27, 1997 -- $166 million -- and the $106
           million already paid on the obligations, and which
           amount is secured by the licenses issued by the FCC to
           the Subsidiary Debtors.”
     13
        The $60 million figure represents the value of the licenses on
January 27, 1997, $166 million, less the two $53 million down-payments
made by GWI.
     14
         As an alternative remedy to avoidance, the Debtors moved the
bankruptcy court to rescind the notes. Avoidance differs considerably
from rescission. Rescission unwinds the transaction and restores the
status quo ante, whereas avoidance allows a debtor to retain the benefit
of its bargain while rewriting the debtor’s obligations under that
bargain. The bankruptcy court declined to order a rescission of the
notes, see 11 U.S.C. §§ 105 & 550, as it would have required a reauction
of the fourteen licenses, resulting in further delay in the development
of licenses by small business, in contravention to Congress’s mandate
in § 309(j) of the FCA.

                                   13
avoiding approximately $894 million of the subsidiary debtors’ and GWI

PCS’s obligation to the FCC.15

     Over the FCC’s objection, the bankruptcy court proceeded to confirm

a plan of reorganization, which incorporated its prior ruling that

avoided $894 million of the subsidiary debtors’ and GWI PCS’s obligation

to the FCC and enjoined the FCC from taking any action to revoke the

fourteen licenses16. The reorganization plan contained two possible

outcomes of the reorganization effort. The first option, labeled the

“Business Alternative,” provided for the Debtors raising money in the

financial markets and continuing with their original plan to offer

wireless communications services. In the event the Business Alternative

failed, the plan also provided for a “Litigation Alternative,” under

which the Debtors would return the fourteen licenses to the FCC and

pursue litigation against the FCC to recover the $106 million down-


     15
          On appeal to the district court, the FCC presented four
arguments: (1) the subsidiary debtors and GWI PCS had incurred a binding
obligation to pay the bid price for the licenses on May 8, 1996, the
date the auction closed; (2) permitting the subsidiary debtors to retain
the licenses without complying fully with the terms of the bid would
unlawfully alter the terms for C-block license ownership established by
FCC regulations; (3) the bankruptcy court erred in extinguishing, rather
than subordinating, the FCC’s claim in excess of $166 million; and (4)
the bankruptcy court erred in its valuation of the licenses on January
27, 1997 at $166 million. Notably, the FCC did not appeal the
bankruptcy court’s determination that the debtor entities should not be
collapsed or treated as one entity under an alter ego theory.
     16
         The confirmation order, in relevant part, states as follows:
           “[It is further] ORDERED that on and after the
     Effective Date, the FCC shall be and hereby is enjoined from
     taking any action whatsoever against the Debtors to revoke
     their PCS licenses in connection with any claim, transaction
     or occurrence which arose prior to the Effective Date . . ..”

                                   14
payment for the licenses, which would then be distributed among the

Debtors’ creditors.    On September 10, 1998, the bankruptcy court,

pursuant to 11 U.S.C. § 1129, entered an order confirming the plan of

reorganization. Under the reorganization plan, the subsidiary debtors

and GWI PCS were obligated to pay the FCC $60 million at a six-and-one-

half per cent rate of interest; this $60 million obligation was secured

by the licenses. The bankruptcy court also modified the reorganization

plan to preserve certain issues raised in the appeal of the avoidance

judgment.17 In short, if a reviewing court did not affirm the avoidance

judgment and determined that the bankruptcy court’s valuation of the

licenses was incorrect, the FCC would receive an increased secured claim

     17
        In the confirmation order, the bankruptcy court provided that:
           “[It is further] ORDERED that in the event the
     Avoidance Judgment is not finally affirmed on appeal, and the
     appellate process results in a judgment producing a claim for
     the FCC in an amount in excess of $60 million, the FCC’s
     secured claim, for purposes of the Plan and treatment
     thereunder, shall be increased from $60 million to the lesser
     of (i) the amount of the claim produced by the final judgment
     or (ii) the amount of the claim produced by the average price
     per pop bought at the FCC re-auction of C Block licenses in
     March 1999 multiplied by the number of the pops covered by
     the Debtors’ licenses; and it is further

          [] ORDERED that if the amount of the FCC’s claim as
     determined on appeal is greater than the value established
     at the reauction, the FCC shall have an unsecured claim
     against the Debtors for the difference between the amount
     determined by the reauction and the amount determined on
     appeal, payable on a pro rata basis from the Unsecured
     Creditors’ Fund with all other Unsecured Claims.”

The reorganization plan did not provide for an unsecured claim for the
FCC, but did establish a creditors’ fund of $18 million for the payment
of all unsecured claims in the event that the avoidance judgment was
reversed or modified on appeal, thus keeping available funds if the FCC
became entitled to an unsecured claim.

                                   15
equal to the lesser of (1) the amount determined by final judgment, or

(2) the average price produced at the FCC’s reauction of C-block

licenses scheduled for March 199918. If the amount of the FCC’s claim

determined on appeal was greater than the price at the reauction, the

FCC’s claim would be bifurcated under 11 U.S.C. §§ 502 & 506, with the

FCC receiving an additional unsecured claim for the difference between

the amount determined at the reauction and the amount determined on

appeal, payable out of the creditors’ fund (see note 

) on a pro

rata basis with other unsecured creditors. In preserving the FCC’s

appellate rights, the bankruptcy court sought to provide a fair and

equitable means for the FCC to protect its interest in the licenses

without unduly hindering the Business Alternative and the Debtors’

ability to finance and implement the reorganization plan.

     The FCC appealed the confirmation order to the district court. The

district court, having appellate jurisdiction under 28 U.S.C. § 158(a)19,


     18
        The reauction began on March 23, 1999 and concluded on April
20, 1999. The average bid price per pop of a C-block license bought at
the reauction was $3.88. As the subsidiary debtors’ 14 licenses cover
approximately 17.9 million pops, the amount of the claim produced by the
average price per pop bought at the FCC reauction of the C-block
licenses multiplied by the number of the pops covered by the subsidiary
debtors’ licenses would total approximately $69,452,000.
     19
        28 U.S.C. § 158(a) provides as follows:
          “(a) The district courts of the United States shall
     have jurisdiction to hear appeals[]
               (1) from final judgments, orders, and decrees;
               (2) from interlocutory orders and decrees issued
          under section 1121(d) of title 11 increasing or
          reducing the time periods referred to in section 1121
          of such title; and
               (3) with leave of the court, from other

                                   16
consolidated the FCC’s appeal of the confirmation order and its appeal

of the avoidance judgment.    The FCC also sought a stay of both the

adversary judgment and the confirmation order of the bankruptcy court.

The district court entered a temporary stay on September 10, 1998, which

expired by its terms on September 30, 1998. On September 30, 1998, the

then-Chief Judge of this Court issued a stay “to preserve the status quo

and jurisdiction until . . . this court ha[s] an appropriate opportunity

to determine whether to stay the Avoidance Decision and the Confirmation

Decision until appeals therefrom are finally resolved.” In re United

States, No. 98-11123 (5th Cir. Sept. 30, 1998) (unpublished). This stay

was lifted by this Court on October 7, 1998. In re United States, No.

98-11123 (5th Cir. Oct. 7, 1998) (per curiam) (unpublished). No further

stay was secured by the FCC.

     While the FCC’s consolidated appeals remained pending in the

district court, the Debtors proceeded, in the absence of a stay, to

perform some of the transactions set forth in the Business Alternative.

On October 29, 1998, the Debtors moved to dismiss the entirety of the

FCC’s appeal of the confirmation order and partially dismiss the FCC’s

appeal of the avoidance judgment, because the reorganization plan had




          interlocutory orders and decrees;
     and, with leave of the court, from interlocutory orders and
     decrees, of bankruptcy judges entered in cases and
     proceedings referred to the bankruptcy judges under section
     157 of this title. An appeal under this subsection shall be
     taken only to the district court for the judicial district
     in which the bankruptcy judge is serving.”

                                   17
been substantially consummated.20 The FCC opposed the motion to dismiss

its appeal, and when the district court had not ruled on the FCC’s

appeals nearly ten months later, the Debtors sought a writ of mandamus

from this Court directing the district court to issue a decision. The

mandamus petition was denied when the district court indicated that it

would rule by September 30, 1999. In re GWI PCS 1, Inc., No. 99-10923



     20
         The Debtors listed the following financial transaction as
having been conducted: (1) equity investors having provided
approximately $5.1 million in funding to the Debtors; (2) equity
investors having signed notes with a face value of approximately $5.1
million payable to the Debtors and the Debtors having drawn upon $4.4
million of these funds; (3) Lucent Technologies having funded $30
million to the Debtors; (4) a $28 million payment by the Debtors to
Hyundai Electronics of America; (5) the Debtors’ funding their
contemplated professional fees; (6) the retention of Prudential
Securities, Inc., as a financial advisor and lead manager of the
Debtors’ high yield debt offering, including a $150,000 non-refundable
retainer paid to Prudential; (7) paying an initial distribution to
unsecured creditors holding allowed claims; (8) paying the majority of
the Debtors’ remaining administrative expenses; (9) the Debtors’ issuing
$5 million in preferred stock; (10) the subsidiary debtors signing new
notes and security agreements in favor of the FCC; (11) the Debtors’
payment to the FCC of the first installment on the licenses,
approximately $2 million; (12) payment of the Debtors’ regular operating
expenses, including payroll, payroll taxes, property and equipment lease
payments, and other normal operating business expenses; (13) a $1.6
million payment from to the Debtors to Lucent Technologies in commitment
fees on credit facilities provided by Lucent; (14) the Debtors’ entering
into binding contracts by executing purchase orders to acquire $3
million of fast start services to design and construct their wireless
network; (15) the Debtors, with the assistance of Lucent Technologies,
having begun implementation of the design plans for their network and
the purchase of sophisticated equipment for use therein; (16) the
employment of Arthur Anderson to perform audit services for the years
1997 and 1998; (17) the Debtors having incurred other post-consummation
fees in excess of $150,000 in connection with the preparation of the
offering memorandum; and (18) the filing of UCC-1 financial statements
with the Secretary of State of Texas on behalf of Lucent Technologies.
Before the district court, the FCC did not dispute that these
transactions had occurred.

                                   18
(5th Cir. Aug. 25, 1999) (unpublished).

     On September 27, 1999, the district court issued a decision,

concluding that the Debtors had substantially consummated the plan of

reorganization under the Business Alternative21 and dismissing as

equitably moot the FCC’s appeal of the confirmation order and part of

the FCC’s appeal from the avoidance judgment. See United States v. GWI

PCS 1, Inc., 

, 64 (N.D. Tex. 1999). Without identifying the

portions of the avoidance appeal that remained before it, the district

court held simply that “the court denies the United States’ remaining

claims with respect to the Avoidance Judgment.” 

30,

1999, the district court entered judgment “in accordance with the

court’s order of September 27, 1999", affirming the bankruptcy court’s

orders.22   The FCC timely appealed to this Court.

                              Discussion

     The FCC asserts that the district court erred in three respects:

(1) dismissing portions of its appeal under the doctrine of equitable

mootness; (2) affirming the bankruptcy court’s avoidance judgment,



     21
         In fact, the bankruptcy court had closed the Debtors’
bankruptcy estates in July 1999, finding them to have been fully
administered.
     22
        The Debtors had cross-appealed the confirmation order to the
district court, arguing that the bankruptcy court’s requiring the
Debtors to reserve funds when the FCC’s claim was disallowed and
determining that the FCC had an impaired claim due solely to the
pendency of the appeal of the avoidance judgment were erroneous. See

The district court denied the Debtors’ claims, see 

and the Debtors do not renew these contentions on appeal to this
Court.

                                  19
despite its effect on the regulatory authority of the FCC over the

licenses; and (3) affirming the bankruptcy court’s decision that the

subsidiary debtors’ and GWI PCS’s obligation to the FCC was an avoidable

transfer. We will first address equitable mootness and then turn to the

FCC’s remaining arguments that are not equitably moot.

I    Equitable Mootness

     At the outset, the parties disagree as to the standard of review

this Court should apply when examining a district court’s dismissal of

an appeal as equitably moot. The FCC argues that, although the fact

findings by the district court should be accepted unless clearly

erroneous, the ultimate decision that an appeal is equitably moot

remains a legal determination to be reviewed de novo. Conversely, the

Debtors contend that we should review the district court’s dismissal of

the FCC’s appeal for abuse of discretion–the standard employed by the

Third and D.C. Circuits. In re Continental Airlines, 

, 560

(3d Cir. 1996) (en banc); In re AOV Indus., Inc., 

, 1148

(D.C. Cir. 1986). In In re Berryman Products, Inc., 

(5th

Cir. 1998), we affirmed the district court’s dismissing as moot a

challenge to the confirmation of a reorganization plan of a chapter 11

debtor.   See 

  We prefaced our discussion of whether the

challenge was moot with the following statement regarding our standard

of review: “In the bankruptcy appellate process, we perform the same

function as did the district court: Fact findings of the bankruptcy

court are reviewed under a clearly erroneous standard and issues of law


                                   20
are reviewed de novo.” 

(footnote omitted); see In re Manges,

, 1038-44 (5th Cir. 1994) (undertaking an independent review

of the district court’s dismissal of the debtors’ appeal of the

confirmation order).23   Accordingly, we agree with the FCC and will

employ this standard in reviewing the district court’s ruling on

equitable mootness in the case sub judice as well.

     Equitable mootness “is not an Article III inquiry as to whether a

live controversy is presented; rather, it is a recognition by the

appellate courts that there is a point beyond which they cannot order

fundamental changes in reorganization actions.” In re 

(citation omitted). “Consequently, a reviewing court may

decline to consider the merits of a confirmation order when there has

been substantial consummation of the plan such that effective judicial

relief is no longer available–even though there may still be a viable

dispute between the parties on appeal.”       

(citations

omitted). When evaluating whether an appeal of a reorganization plan

in a bankruptcy case is moot, this Court examines whether (1) a stay has

been obtained, (2) the plan has been substantially consummated, and (3)

the relief requested would affect either the rights of parties not

before the court or the success of the plan.      See In re U.S. Brass



     23
         The Second and Eleventh Circuits have also adopted this
standard. See In re Burger Boys, Inc., 

, 759 (2d Cir. 1996);
In re Club Assoc., 

, 1069 (11th Cir. 1992). See also In
re Western Pac. Airlines, Inc., 

, 1194 (10th Cir. 1999);
In re Filtercorp, Inc., 

, 576 (9th Cir. 1998) (both
reviewing mootness de novo).

                                   21
Corp., 

, 959 (5th Cir. 1999) (citing In re Berryman 

; In re 

).24 We consider each in

turn.

     A.   Failure to Obtain a Stay

     The first question in a mootness inquiry is whether the FCC secured

a stay to prevent execution of the reorganization plan.          “[T]he

requirement of a stay encapsulates the fundamental bankruptcy policy of

reliance on the finality of confirmation orders by the bankruptcy

court.” In re Berryman 

(footnote and citations

omitted).25 Although the FCC secured a temporary stay from the district



     24
         As we stated in Manges:
      “‘The test for mootness reflects a court’s concern for
      striking the proper balance between the equitable
      considerations of finality and good faith reliance on a
      judgment and the competing interests that underlie the right
      of a party to seek review of a bankruptcy order adversely
      affecting him.’” In re 

(quoting In
      re Club 

).
The Eleventh Circuit considers an additional factor–whether the relief
sought would affect the reemergence of the debtor as a revitalized
entity. See In re Club 

n.11.
     25
         The Seventh Circuit has explained that:
     “The significance of an application for a stay lies in the
     opportunity it affords to hold things in stasis, to prevent
     reliance upon the plan of reorganization while the appeal
     proceeds. A stay not sought, and a stay sought and denied,
     lead equally to the implementation of the plan of
     reorganization. And it is the reliance interests engendered
     by the plan, coupled with the difficulty of reversing
     critical transactions, that counsels against attempts to
     unwind things on appeal. Every incremental risk of revision
     of appeal puts a cloud over the plan of reorganization, and
     derivatively over the assets of the reorganized firm.” In
     re UNR Indus., 

, 769-70 (7th Cir. 1994) (quoted
     in In re 

).

                                  22
court on September 10, 1998 and from this Court on September 30, 1998,

the stay was lifted on October 7, 1998 and no further stays were

effectuated.

     The FCC argues that “third parties are well aware of the

government’s position that licensees such as GWI are not entitled to

retain licenses without paying the full amount of the winning auction

bid. Investors’ knowledge of that position, as well as the pendency of

this appeal, appears to have had the same effect as a stay.” This

contention, however, has no bearing on whether a stay has or has not

been obtained; rather, this point instructs our determination of whether

the reorganization plan has been substantially consummated and the

effect on parties not before the court–the second and third factors in

our equitable mootness analysis–and cannot serve as a proxy for a

judicial stay of the reorganization plan. In the absence of a stay, the

reorganization plan became effective and has been implemented since

October 7, 1997. This factor therefore militates in favor of dismissal

for mootness.

     B.    Substantial Consummation of the Reorganization Plan

     The second consideration in the mootness inquiry is whether the

reorganization plan has been substantially consummated. We have adopted

the “‘substantial consummation’ yardstick because it informs our

judgment as to when finality concerns and the reliance interests of

third parties upon the plan as effectuated have become paramount to a

resolution of the dispute between the parties on appeal.” In re Manges,



                                   

(citations omitted). According to 11 U.S.C. § 1101(2):

     “‘[S]ubstantial consummation’ means–
     (A) transfer of all or substantially all of the property
     proposed by the plan to be transferred;
     (B) assumption by the debtor or by the successor to the
     debtor under the plan of the business or of the management
     of all or substantially all of the property dealt with by the
     plan; and
     (C) commencement of distribution under the plan.”

     The FCC and the Debtors dispute whether the reorganization plan has

been substantially consummated. The Debtors reiterate on appeal the

numerous transactions completed following the confirmation of the

reorganization plan, see supra note 20, that persuaded the district

court to “conclude[] that the reorganization plan ha[d] been

substantially consummated because substantially all of the property

proposed by the plan to be transferred has been transferred, Debtors are

managing substantially all of the property dealt with by the plan, and

distribution under the plan has commenced.” GWI PCS 1, 

. Although the FCC does not contest that these transactions have

occurred, the FCC maintains that they do not satisfy the “substantially

consummated” standard for three reasons: (1) only “insiders”, i.e., plan

participants,   have   provided   funding   for   the   Debtors   in   the

reorganization and have been paid funds in the reorganization and thus

lack a good faith expectation that the FCC’s appeal would not be

successful; (2) the Debtors have not obtained the $250 million in

financing set forth in the reorganization plan and thus have been unable

to create a wireless communications system; and (3) the “Litigation

Alternative” in the reorganization plan contemplated ongoing litigation

                                   24
between the FCC and the Debtors, thereby not making return of licenses

to the FCC and consummation of the plan mutually exclusive. We disagree

with the FCC and conclude that the reorganization plan has been

substantially consummated.

     First, the FCC’s argument that only “insiders” have provided

financing to the Debtors and have received payments from the Debtors and

therefore lack good faith reliance on the reorganization plan, even if

true, has never been a consideration in determining whether a

reorganization has been substantially consummated.          See In re

Continental 

(“While we agree that reliance of

the Investors and others on the unstayed Confirmation Order is of

central importance to our [equitable mootness] analysis, to focus on the

‘reasonableness’ of that reliance, at least as measured by the

likelihood of reversal on appeal, is necessarily a circular enterprise

and therefore of little utility. . . . Our inquiry should not be about

the ‘reasonableness’ of the Investors’ reliance or the probability of

either party succeeding on appeal.”); cf. In re Sullivan Cent. Plaza,

1, Ltd., 

, 734-35 (5th Cir. 1990) (refusing to consider the

alleged lack of good faith by a purchaser of debtor property in

determining whether an appeal was moot under 11 U.S.C. § 363(m)).26

Moreover, it would be natural for many, if not a majority, of the

transactions set forth in a reorganization plan to involve the



     26
       This is not to deny the relevance of such matters to the issue
of whether or not a stay should be granted in the first place.

                                   25
participants of the chapter 11 proceedings. Therefore, this argument

fails.

     Second, the FCC contends that the Debtors have yet to obtain all

the financing required under the reorganization plan and have neither

constructed nor made operable a personal communications system. The

Debtors respond that, although additional financing is required for the

completion of the personal communications system, the effectiveness of

the reorganization plan does not necessarily depend on obtaining such

financing.   We agree.    Our standard requires only “substantial

consummation,” not absolute or complete consummation. The Debtors’

failure to acquire full financing does not take away from the

transactions that have been completed, see supra note 20. Accordingly,

this argument does not mandate a conclusion that substantial

consummation has not been achieved.

     Third, the FCC maintains that, despite the transactions that have

occurred, the contemplation of the return of the licenses to the FCC in

the Litigation Alternative precludes a finding of substantial

consummation. As the Debtors point out, however, no steps have been

taken towards the Litigation Alternative; instead, it has been eschewed

in favor of the Business Alternative with a number of transactions

having been completed in furtherance of the Business Alternative. More

importantly, the reorganization plan’s provision of the Litigation

Alternative bears more upon the effect of allowing the FCC’s appeal to

be considered on third parties, not on whether the reorganization plan,



                                  26
as implemented through the Business Alternative, has been substantially

consummated. Therefore, we agree with the Debtors and the district

court27 that substantial consummation has been achieved; therefore, this

factor weighs in favor of dismissal.

     C.    Effect on Parties Not Before the Court

     The final question in the mootness inquiry involves whether the

requested relief would affect the rights of parties not before the court

or the success of the reorganization plan. See In re Berryman Prods.,

.    As we stated in Manges, “‘[s]ubstantial

consummation of a reorganization plan is a momentous event, but it does

not necessarily make it impossible or inequitable for an appellate court

to grant effective relief.’” In re 

(quoting


     27
         On this point, the district court ruled as follows:
           “Although the United States agrees that these
     transactions have taken place, it does not believe that they
     constitute substantial consummation. The court disagrees.
     Upon review of the pleadings filed and the appellate record,
     the court concludes that the reorganization plan has been
     substantially consummated because substantially all of the
     property proposed by the plan to be transferred has been
     transferred, [the] Debtors are managing substantially all of
     the property dealt with by the plan, and distribution under
     the plan has commenced. The United States also disputes
     substantial consummation because the Litigation Alternative
     exists as a part of the confirmed reorganization plan.
     Again, the court disagrees. As discussed above, the court
     concludes that substantial consummation of the plan, by way
     of the Business Alternative, has already taken place
     irrespective of the possibility of implementation of the
     Litigation Alternative whereby the licenses would be returned
     to the FCC, and litigation for the benefit of the creditors
     and equity would be initiated to attempt to recover the
     payments made by [the] Debtors to the FCC. Accordingly, the
     second factor also weighs in favor of dismissal of the appeal
     as moot.” GWI PCS 1, 

-64.

                                   27
In re Chateaugay Corp., 

, 952 (2d Cir. 1993)) (alteration in

original). Here, we must evaluate the transactions that have occurred

under the reorganization plan against the backdrop of the relief sought

by the FCC–reinstatement of the full $954 obligation under the notes and

bid price and the increased risk of revocation of the licenses for

failure to satisfy the increased obligation. Despite the inclusion of

the Litigation Alternative in the reorganization plan, it remains

obvious that saddling the subsidiary debtors with an additional $894

million obligation would have a detrimental affect on the post-

bankruptcy investors and entities and on the success of the Business

Alternative, which was the route preferred by the majority of the

bankruptcy participants in resolving the Debtors’ chapter 11 petition.

In sum, it appears quite unlikely that we could place the Debtors’

estates or the third parties back into the status quo as it existed

before the avoidance judgment if we were to unravel this important and

fundamental aspect of the reorganization plan at this time. Therefore,

we conclude that this factor also weighs heavily in favor of mooting the

FCC’s appeal.28


     28
        In its consideration of this factor, the district court stated
as follows:
           “[T]he court must determine whether the granting of
     relief on appeal would affect the rights of third parties not
     before the court or the success of the plan. Upon review of
     the pleadings filed and the appellate record, the court
     concludes that the granting of the relief which the United
     States seeks on appeal would affect the rights of third
     parties not before the court and the success of the plan.
     The various investors and entities which have consummated
     transactions with Debtors since the entry of the Confirmation

                                   28
     D.    Application of Equitable Mootness to the FCC’s Arguments

     As all three factors weigh in favor of the district court’s

dismissal of part of the FCC’s appeal, we hold that the district court

properly granted the Debtors’ motion to dismiss. Having concluded that

equitable mootness applies, we now turn to what it applies to. As the

FCC properly concedes that its challenge to the authority of the

bankruptcy court to permit the subsidiary debtors to retain the licenses

and the subsidiary debtors and GWI PCS to avoid $894 million of the

subsidiary debtors’ and GWI PCS’s obligation to pay the full bid price

for the licenses, does not amount to a contention that the bankruptcy

court actually lacked jurisdiction, as such, to enter any portion or

portions of the complained of orders,29 we hold this challenge is


     Order, and the confirmation plan itself, would be
     detrimentally affected if [the] Debtors were suddenly
     obligated to the FCC for an additional $900 million. The
     third factor, therefore, weighs in favor of dismissal of the
     appeal as moot.” GWI PCS 1, 

.
     29
        The bankruptcy court’s enjoining the FCC from revoking the
licenses and avoiding the majority of the obligations under the notes
was within its jurisdiction to preserve property of the estate, see 11
U.S.C. § 541, and further the reorganization plan. In addition, 11
U.S.C. § 106 renders the United States and the FCC subject to the
bankruptcy proceedings. Section 106 states as follows:
     “(a) Notwithstanding an assertion of sovereign immunity,
     sovereign immunity is abrogated as to a governmental unit to
     the extent set forth in this section with respect to the
     following:
                (1) Sections 105, 106, 107, 108, 303, 346, 362,
           363, 364, 365, 366, 502, 503, 505, 506, 510, 522, 523,
           524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550,
           551, 552, 553, 722, 724, 726, 728, 744, 749, 764, 901,
           922, 926, 928, 929, 944, 1107, 1141, 1142, 1143, 1146,
           1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303, 1305,
           and 1327 of this title.

                                   29
equitably moot.    Although the bankruptcy court possibly erred in

permitting avoidance and enjoining the FCC from revoking the subsidiary

debtors’ licenses for failing to remit the full bid price, thereby



                 (2) The court may hear and determine any issue
           arising with respect to the application of such
           sections to governmental units.
                 (3) The court may issue against a governmental
           unit an order, process, or judgment under such sections
           or the Federal Rules of Bankruptcy Procedure, including
           an order or judgment awarding a money recovery, but not
           including an award of punitive damages. Such order or
           judgment for costs or fees under this title or the
           Federal Rules of Bankruptcy Procedure against any
           governmental unit shall be consistent with the
           provisions and limitations of section 2412(d)(2)(A) of
           title 28.
                 (4) The enforcement of any such order, process, or
           judgment against any governmental unit shall be
           consistent with appropriate nonbankruptcy law
           applicable to such governmental unit and, in the case
           of a money judgment against the United States, shall be
           paid as if it is a judgment rendered by a district
           court of the United States.
                 (5) Nothing in this section shall create any
           substantive claim for relief or cause of action not
           otherwise existing under this title, the Federal Rules
           of Bankruptcy Procedure, or nonbankruptcy law.
           (b) A governmental unit that has filed a proof of claim
     in the case is deemed to have waived sovereign immunity with
     respect to a claim against such governmental unit that is
     property of the estate and that arose out of the same
     transaction or occurrence out of which the claim of such
     governmental unit arose.
           (c) Notwithstanding any assertion of sovereign immunity
     by a governmental unit, there shall be offset against a claim
     or interest of a governmental unit any claim against such
     governmental unit that is property of the estate.” 11 U.S.C.
     § 106.
Moreover, 28 U.S.C. § 1334(b), which provides district courts with
jurisdiction over all civil proceedings arising under title 11, or
arising in or related to cases filed under title 11, “[n]otwithstanding
any Act of Congress that confers exclusive jurisdiction on a court or
courts other than the district courts,” and 28 U.S.C. § 157 grant the
bankruptcy court jurisdiction to consider the Debtors’ avoidance claims.

                                   30
taking onto itself a quasi-regulatory function held by the FCC, the

FCC’s challenge on this point and request that the avoidance judgment,

in its entirety, and the enjoinment order, be reversed are barred by

equitable mootness.

     The   Second   Circuit’s   decision,   In   re   NextWave   Personal

Communications, Inc., 

(2d Cir. 1999) (per curiam), cert.

denied, No. 99-1980 (U.S. Oct. 10, 2000), although casting doubt on the

merits of the bankruptcy court’s assuming a quasi-regulatory role, does

not dissuade us from ruling that the FCC’s challenge on this issue is

equitably moot. NextWave Personal Communications, Inc. (NextWave), like

GWI PCS, was the high bidder for C-block licenses at the FCC’s 1995-96

C-block auction. See 

Similar to nearly all winning bidders

for C-block licenses, NextWave experienced financial difficulties and

on June 8, 1998 “filed a Chapter 11 petition and instituted an adversary

proceeding against the FCC that sought to avoid the company’s

obligations resulting from its acquisition of the Licenses.” 

The bankruptcy court granted NextWave’s relief in the adversary

proceeding, finding that the transaction in which it had acquired the

licenses was a fraudulent transfer subject to avoidance. See 

Accordingly, the bankruptcy court reduced NextWave’s obligation to the

FCC from $4.74 billion to $1.02 billion.30 See 

Circuit

     30
         As in the present case, the bankruptcy court valued the
licenses as of the date the notes securing NextWave’s obligation were
executed, not on the closing date of the C-block auction. See 

The bankruptcy court also credited NextWave with its $474
million in down-payments, leaving approximately $549 million in payment

                                   31
reversed the bankruptcy court’s avoidance judgment, concluding that the

bankruptcy court improperly “exercised the FCC’s radio-licensing

function.”   

   In contrast to the present case where the

district court dismissed this claim by the FCC as equitably moot, the

district court in NextWave had “affirmed [the avoidance judgment] for

substantially the reasons stated by the bankruptcy court.“ 

(citing In re NextWave Personal Communications, Inc., 

(S.D.N.Y. 1999)). The district court in NextWave did not find the FCC’s

appeal to be equitably moot, nor did the Second Circuit consider that

issue. In fact, the FCC had successfully obtained a stay in NextWave

and NextWave did not have a confirmed reorganization plan to consummate.

Accordingly, mootness was not at issue. Therefore, although the Second

Circuit’s decision supports the FCC’s substantive merits argument, it

does not prevent the FCC’s challenge on this issue from being equitably

moot.31

     The reorganization order, however, preserved certain challenges to

the valuation of the licenses and the amount of a the FCC’s claim

against the Debtors.      In light of the results of the March 1999

reauction of C-block licenses, see supra note 18, the remedy now



left to be made to the FCC.     See 

     31
        Indeed, if the issue were not equitably moot, we might agree
with the Second Circuit and reverse the bankruptcy court’s avoidance
judgment. However, that is not the case before us, and we need not and
do not decide the matter. We observe that no party has urged before us
the applicability, or otherwise, of 11 U.S.C. § 362(b)(4), or indeed
even cited that section to us.

                                   32
available to the FCC is necessarily limited to an unsecured claim for

any amount the FCC’s claim is determined on appeal to be in excess of

the average winning bid at the March 1999 C-block reauction, see supra

notes 17 and 18. At oral argument, counsel for the Debtors conceded

that the reorganization plan preserved two grounds for the FCC to

appeal: (1) the valuation of the licenses as of January 27, 1997; and

(2) when the subsidiary debtors’ and GWI PCS’s obligation to the FCC

arose.    These challenges can not result in the revocation of the

licenses, but rather only in the recoupment of more money by the FCC as

an unsecured claim.   We now turn to the FCC’s contention that the

bankruptcy court erred in avoiding $894 million of the subsidiary

debtors’ and GWI PCS’s obligation to the FCC, keeping in mind that the

avoidance judgment cannot now be vacated and the only remedy available

to the FCC is an unsecured claim (payable only out of the $18 million

Unsecured Creditors’ Fund, see notes 17 and 

).

II   The Avoidance Judgment

     The bankruptcy court avoided approximately $894 million of the

subsidiary debtors’ and GWI PCS’s obligation to the FCC as a

constructive fraudulent transfer under 11 U.S.C. § 548(a)(2) (1996)32.

The elements of a claim of constructive fraud under section 548(a)(2)

are that: (1) the debtor transferred an interest in property; (2) the

transfer of that interest occurred within one year prior to the filing

of the bankruptcy petition; (3) the debtor was insolvent on the date of


     32
          See note 

.

                                  33
the transfer or became insolvent as a result thereof; and (4) the debtor

received less than reasonably equivalent value in exchange for such

transfer. See In re McConnell, 

, 664 (5th Cir. 1991); see

also In re XYZ Options, Inc., 

, 1275 (11th Cir. 1998);

Butler v. Lomas and Nettleton Co., 

, 1017 (3d Cir. 1988);

cf. Burroughs v. Fields, 

, 218 (7th Cir. 1976) (interpreting

11 U.S.C. § 107, the predecessor to 11 U.S.C. § 548). The FCC does not

appeal the bankruptcy court’s valuation of the licenses as of January

27, 1997, or March 14, 1997, nor does the FCC contend that the

subsidiary debtors or GWI PCS were solvent as of January 27, 1997 or

March 14, 1997.    Therefore, any such arguments have been waived.

However, the FCC does contest the bankruptcy court’s decision to choose

January 27, 1997 (or March 14, 1997) as the appropriate date for the

avoidance inquiry. The Debtors bear the burden of establishing the date

the transfer occurred. See In re 

n.1; In re

Morris Communications NC, Inc., 

, 466 (4th Cir. 1990). The

bankruptcy court’s determination on this issue involves a mixed question

of law and fact, which we review de novo (although findings of historic

facts are accepted unless clearly erroneous).      See In re Southmark

Corp., 

, 106 (5th Cir. 1995) (citing Barnhill v. Johnson, 

, 1389 (1992)).

     The date on which the payment obligation arose is crucial to

whether this obligation is avoidable. First, if the subsidiary debtors

and GWI PCS incurred the obligation at the close of the auction, May 8,


                                   34
1996, then the value of the fourteen licenses would be $1.06 billion.

And if the fair market value were $1.06 billion, then the consummation

of the notes would not be a constructive fraudulent transfer. On the

other hand, if their obligation first arose on or about the date on

which the licenses were conditionally granted, January 27, 1997, or on

March 14, 1997, then the $954 million obligation represented by the

notes substantially exceeded the fair market value of the licenses.

Second, if the obligation arose on May 8, 1996, then it would not have

been incurred within one year of the filing of the Debtors’ bankruptcy

petitions and would therefore not have been avoidable. In support of

its position that the obligation arose on the date the C-block auction

closed, the FCC relies on the following: (1) its own interpretation of

its regulations; (2) auction law principles; and (3) the Second

Circuit’s NextWave decision, which relies on (1) and (2). In response,

the subsidiary debtors and GWI PCS assert that the FCC’s interpretation

does not warrant deference and that the bankruptcy court correctly fixed

January 27, 1997 as the appropriate date, because the FCC’s own

regulations provide that the licenses were not transferred and the full

bid price incurred until January 27, 1997.       We conclude that the

bankruptcy court did not err in evaluating the transfer as of January

27, 1997.

     We first address the FCC’s argument that this Court should defer

to the FCC’s formal interpretation that under its regulations the

binding obligation to pay the full bid price attaches “upon the



                                   35
acceptance of the high bid.”    In re Applications for Assignment of

Broadband Personal Communications Servs. Licenses, 14 F.C.C.R. 1126 ¶

1, 

(Dec. 23, 1998); see In re C.H. PCS, Inc., 14 F.C.C.R.

4131 ¶ 3, 

(Jan. 22, 1999) (“[U]nder the Commission’s

rules, a winning bidder is obligated to pay the full amount of its

winning bid . . ..”).   Accordingly, under this interpretation, the

obligation was incurred, in the present case, on May 8, 1996.        In

NextWave, the Second Circuit afforded this interpretation considerable

deference in ruling that NextWave’s obligation arose at the close of the

C-block auction, despite NextWave’s contention that the FCC’s status as

a creditor and its self-interest precluded the court’s deferring to the

FCC’s interpretation. See In re 

(“Our ruling

is based on the FCC’s interpretation of its own regulations, to which

courts owe deference . . ..”); 

(“The financial benefits of the

FCC’s post hoc interpretation do not extinguish the courts’ duty to give

deference.”).

     We respectfully disagree with the Second Circuit’s conclusion that

courts should defer to the FCC’s interpretation in this matter. The FCC

did not announce its interpretation until December 23, 1998–nearly two

years after C-block licensees began experiencing financial difficulties

and after the Debtors had filed bankruptcy petitions, brought an

adversary proceeding against the FCC, and obtained a judgment in the




                                   36
adversary proceeding on June 4, 1998.33      Moreover, in a separate

statement issued with the December 23, 1998 order, FCC Chairman William

Kennard wrote that “some of the[] issues [addressed in this order] only

emerge[d] as a result of the lessons learned during litigation.” In re

Applications for Assignment of Broadband Personal Communications Servs.

Licenses, Statement of Chairman William Kennard, 14 F.C.C.R. 1126, 

(Dec. 23, 1998). In fact, paragraph one of the December 23,

1998 order, which contains the interpretation the FCC argues that this

Court should defer to, states that the newly adopted procedures for

transferring licenses “was made in light of a recent bankruptcy court

decision and arguments raised in other pending bankruptcy proceedings.”

(footnote omitted). This bankruptcy decision and proceedings,

as noted in the margin of the order, were those of the lower courts in

this dispute between the Debtors and the FCC.         See 

n.3

(containing the following citation: “See, e.g., In re GWI PCS 1, Inc.,

et al., Case Nos. 39739676 through 39739689 (Bankr. N.D. Tex.); GWI PCS

1, Inc. v. FCC, Adv. No. 397-3492 (Bankr. N.D. Tex.) (appeal pending)”).

In circumstances such as these, where an agency’s interpretation occurs

at such a time and in such as manner as to provide a convenient

litigation position for the agency, we have declined to defer to the

interpretation. See Waste Control Specialists v. United States Dept.


     33
        The present litigation was not the only one pending in December
1998 that raised the issue of avoidance; for example, NextWave filed its
chapter 11 petition and instituted its adversary proceeding against the
FCC on June 8, 1998. See In re 

.

                                   37
of Energy, 

, 567 (5th Cir. 1998) (“We will not give

deference to [the Department of Energy]’s interpretation . . ., because

it had not enunciated its interpretation prior to the litigation.”)

(footnote and citations omitted); United States v. Food, 2,998 Cases,

, 987 n.5 (5th Cir. 1995) (“Because it appears that the FDA

interpreted § 334 and § 381 at such a time and in such a manner so as

to provide a convenient litigation position for this suit, we disagree

and conclude that the FDA’s position is not controlling.”) (citation

omitted); Irving Indep. Sch. Dist. v. Packard Properties, 

,

64 (5th Cir. 1992) (“Discounting the FDIC interpretation is appropriate

for another important reason. The FDIC’s Legal Memorandum was issued

during pending litigation.”); see also Bowen v. Georgetown Univ. Hosp.,

, 474 (1988) (“Deference to what appears to be nothing more

than an agency’s convenient litigating position would be entirely

inappropriate.”); Nordell v. Heckler, 

, 48 (D.C. Cir. 1984)

(“To carry much weight, however, the [agency] interpretation must be

publicly articulated some time prior to the agency’s embroilment in

litigation over the disputed provision.”).      Accordingly, we do not

afford the FCC’s December 1998 interpretation deference in determining

the appropriate date on which the subsidiary debtors’ and GWI PCS’s

obligation to the FCC arose.

     We now consider the FCC’s argument that auction law supports its

position that the transfer must be evaluated at the date the C-block

auction closed–May 8, 1996. General principles of auction law provide


                                   38
a baseline rule that the close of an auction–the fall of the

hammer–signals acceptance of the offer and creates a binding contract

between the seller and the high bidder. See Blossom v. Railroad Co.,

70 U.S. (3 Wall.) 196, 206 (1865) (“[A]s soon as the hammer is struck

down . . . the bargain is considered as concluded, and the seller has

no right afterwards to accept a higher bid nor the buyer to withdraw

from the contract.”) (footnote and citations omitted); Lawrence Paper

Co. v. Rosen & Co., 

, 378-79 (6th Cir. 1991) (“‘The contract

becomes complete only when the bid is accepted, this being ordinarily

denoted by the fall of a hammer.’”) (quoting 7 AM. JUR. 2D Auctions &

Auctioneers § 16 (1980 & Supp. 1991)); Bottorff v. Ault, 

,

835 (7th Cir. 1967) (“The sales here were at auction.        They were

completed when the hammer fell or when the auctioneer said ‘sold.’”)

(citation omitted); United States v. Conrad, 

, 1321

(M.D. Fla. 1985) (“It has long been settled that a bid constitutes an

offer and the fall of the hammer signifies acceptance.”).          This

postulate of auction law, however, merely provides a baseline, which,

in the context of the FCC’s auction of the electromagnetic spectrum, has

been modified by the FCC’s regulations. In NextWave, the Second Circuit

agreed with the FCC’s interpretation of the bidding regulations,

concluding that at the close of a C-block auction a winning bidder

“became obligated, if qualified, to pay the . . . bid price or, if

unqualified, to pay a prescribed penalty.” In re 

. The Second Circuit then reasoned that, “[b]y making the high bid,


                                   39
NextWave (a) assumed an obligation to pay a down-payment promptly, (b)

assumed an obligation to pay in the future the amount of its bid upon

receipt of the Licenses and (c) assumed the risk that it might prove

unqualified, by binding itself in that event to pay the amount of any

shortfall in a re-auction of the same Licenses.” 

Thus, the

Second Circuit determined that NextWave became obligated to pay the FCC

the full bid price at the close of the auction.        We respectfully

disagree with the Second Circuit’s conclusion in this respect.

     Neither the FCA nor FCC regulations states that the high bidder for

a C-block license becomes obligated for the full amount of the bid at

the close of the auction.   Instead, 47 C.F.R. § 24.704 provides as

follows:

           “(a) When the Commission conducts a simultaneous
     multiple round auction pursuant to § 24.702(a)(1), the
     Commission will impose penalties on bidders who withdraw high
     bids during the course of an auction, who default on payments
     due after an auction closes, or who are disqualified.
           (1) Bid withdrawal prior to close of auction. A bidder
     who withdraws a high bid during the course of an auction will
     be subject to a penalty equal to the difference between the
     amount bid and the amount of the winning bid the next time
     the license is offered by the Commission. No withdrawal
     penalty would be assessed if the subsequent winning bid
     exceeds the withdrawn bid. This penalty amount will be
     deducted from any upfront payments or down payments that the
     withdrawing bidder was [sic] deposited with the Commission.
           (2) Default or disqualification after close of auction.
     If a high bidder defaults or is disqualified after the close
     of such an auction, the defaulting bidder will be subject to
     the penalty in paragraph (a)(1) of this section plus an
     additional penalty equal to three (3) percent of the
     subsequent winning bid. If the subsequent winning bid
     exceeds the defaulting bidder’s bid amount, the 3 percent
     penalty will be calculated based on the defaulting bidder’s
     bid amount. These amounts will be deducted from any upfront
     payments or down payments that the defaulting or disqualified

                                  40
     bidder has deposited with the Commission.”       47 C.F.R. §
     24.704(a) (1995).34

This penalty provision does not obligate the winning bidder to pay the

full amount of the bid. Accordingly, by making the winning bids on the

fourteen licenses, GWI PCS only obligated itself to pay a penalty in the

event of default or disqualification, not the full amount of the winning

bids.35 There has been no default respecting the fourteen licenses for


     34
        This regulation governing the auction of the electromagnetic
spectrum comports with the FCC’s general competitive bidding procedures
contained in 47 C.F.R. §§ 1.2104(g) & 1.2109(c) (1995).
     35
        The FCC’s treatment of a defaulting entity further supports
this conclusion. See In re BDPCS, Inc., 11 F.C.C.R. 14,399, 

(Oct. 25, 1996). BDPCS was a high bidder for seventeen C-block
licenses, but “fail[ed] to remit the required down payment on the
licenses for which it was the successful high bidder.” 

. On May
30, 1996, the FCC publicly announced that BDPCS had defaulted on the
seventeen licenses and that these licenses would be reauctioned in July
1996. See 

With regard to BDPCS’s obligation to the FCC, the
October 25, 1996 order states as follows:
     “A defaulting bidder is subject to certain default payment
     obligations. Specifically, such bidder is required to pay
     the difference between the amount bid and the amount of the
     winning bid the next time the license is offered by the
     Commission (so long as the subsequent winning bid is less
     than the amount bid), plus an additional payment equal to
     three percent of the defaulter’s bid or the subsequent
     winning bid, whichever is less. In the event that a license
     is reauctioned for amount greater than or equal to the
     defaulted bid, the total default payment is equal to three
     percent of the defaulted bid. In the event that the default
     payment cannot be determined (i.e, because a license has not
     yet been reauctioned), the Commission has indicated that a
     deposit may be assessed of up to 20 percent of the defaulted
     bid price. Finally, the Commission’s payment rules provide
     that if a defaulting bidder does not submit the default
     payment assessed by the Commission in the time required, any
     amounts overdue ‘will be deducted from any upfront payments
     or down payments that the defaulting or disqualified bidder
     has deposited with the Commission.” 

(footnotes
     omitted).

                                   41
which GWI PCS was the high bidder. No penalty therefore has been

assessed or can be calculated.36

     After the close of the auction on May 8, 1996, GWI PCS was merely

entitled to apply for the licenses.       To be sure, GWI PCS held a

contingent right to the fourteen licenses; however, the FCC’s January

27, 1997 order makes clear that the transfer of the licenses was not

complete until the execution of the notes and the payment of the

remaining portion of the down-payment. See Wireless Telecommunications

Bureau Announces Grant of Broadband Personal Communications Services

Entrepreneurs’ C Block Licenses to GWI PCS Inc., 12 F.C.C.R. 1215, 

(Jan. 27, 1997) (“GWI PCS will receive its individual BTA

licenses following payment for each license of the final down payment

and execution and return of the note and security agreement.”); 

. . . granted GWI PCS’s applications, conditioned on

timely payment of its remaining down payment obligation.”).37 GWI PCS’s

applications remained subject to objection by the public (and in fact

were objected to) and could have been rejected by the FCC–a decision

affording the FCC some level of discretion. See 47 C.F.R. § 24.832(a)


Notably, this order does not state that BDPCS is, or was ever, obligated
to the FCC for the full amount of its bid price.
     36
       In fact, the subsidiary debtors assert that, since the bankruptcy
court confirmed the reorganization plan, they have made over $9 million
in installment payments to the FCC under the modified obligation to the
FCC–a contention the FCC does not dispute.
     37
       In addition, interest on the bid amount did not begin to accrue
until the conditional granting of the licenses. See 47 C.F.R. §
24.711(b)(1) (1995); 47 C.F.R. § 1.2110(e)(3)(i) (1995).

                                   42
(1995) (“Applications for an instrument of authorization will be granted

if, upon examination of the application and upon consideration of such

other matters as it may officially notice, the Commission finds that the

grant will serve the public interest, convenience and necessity.”)

(emphasis added); 47 C.F.R. § 24.804(a) (1995) (“Authorizations will be

granted upon proper application if: (1) The applicant is qualified under

all applicable laws and Commission regulations, policies and decisions;

(2) There are frequencies available to provide satisfactory service; and

(3) The public interest, convenience or necessity would be served by a

grant.”) (emphasis added); see also 47 C.F.R. § 1.2108(d)(1) (1995) (“If

the Commission determines that: (1) an applicant is qualified and there

is no substantial and material issue of fact concerning            that

determination, it will grant the application.”); In re Implementation

of Section 309(j) of the Communications Act–Competitive Bidding, Fifth

Report and Order, 9 F.C.C.R. 5532 ¶ 81, 

(July 15, 1994)

(“If the Commission denies all petitions to deny, and is otherwise

satisfied that the applicant is qualified, the license(s) will be

granted to the auction winner.”).38 In addition, it is undisputed that


     38
        The FCC also has the authority to amend the terms for awarding
a license after an application for the license has been filed. See
PLMRS Narrowband Corp v. FCC, 

, 1000-01 (D.C. Cir. 1999)
(concluding that the FCC’s decision to auction licenses and return all
pending applications, which had been submitted when the licenses were
awarded by a lottery system, was not arbitrary and capricious); Mobile
Communications Corp. of Am. v. FCC, 

, 1402-03 (D.C. Cir.
1995) (upholding the FCC’s authority to impose a payment requirement for
a license, where the potential licensee applied for the license before
the FCC required any payment).

                                   43
while the applications were pending, GWI PCS could not and did not use

the licenses. See 47 C.F.R. § 24.803 (1995) (“No person shall use or

operate any device for the transmission of energy or communications by

radio in the services authorized by this part except as provided in this

part.”). Only after the applications were approved and the promissory

notes had been signed, could the fruits of the licenses be utilized.39


     39
        The FCC regulations, however, do provide for the temporary use
of a license with FCC permission. 47 C.F.R. § 24.825 provides as
follows:
           “(a) In circumstances requiring immediate or temporary
     use of facilities, request may be made for special temporary
     authority to install and/or operate new or modified
     equipment. Any such request may be submitted as an informal
     application in the manner set forth in § 24.805 and must
     contain full particulars as to the proposed operation
     including all facts sufficient to justify the temporary
     authority sought and the public interest therein. No such
     request will be considered unless the request is received by
     the Commission at least 10 days prior to the date of proposed
     construction or operation or, where an extension is sought,
     at least 10 days prior to the expiration date of the existing
     temporary authorization. The Commission may accept a
     late-filed request upon due showing of sufficient reasons for
     the delay in submitting such request.
           (b) Special temporary authorizations may be granted
     without regard to the 30- day public notice requirements of
     § 24.827(b) when:
                 (1) The authorization is for a period not to
           exceed 30 days and no application for regular operation
           is contemplated to be filed;
                 (2) The authorization is for a period not to
           exceed 60 days pending the filing of an application for
           such regular operation;
                 (3) The authorization is to permit interim
           operation to facilitate completion of authorized
           construction or to provide substantially the same
           service as previously authorized; or
                 (4) The authorization is made upon a finding that
           there are extraordinary circumstances requiring
           operation in the public interest and that delay in the
           institution of such service would seriously prejudice

                                   44
Accordingly, the C-block auction was not a typical auction. Under the

C-block auction rules, the winning bidder is not entitled to the license

until after receiving subsequent FCC approval and does not become

obligated for the full bid price until the notes securing the full bid

price are thereafter signed.

     The transfer of subsidiary debtors’ fourteen licenses and the

concurrent obligation to pay the remaining bid price, $954 million, did

not arise until the subsidiary debtors executed the promissory notes for

the remainder of the bid price on January 27, 1996. See In re Southmark




           the public interest.
           (c) Temporary authorizations of operation not to exceed
     180 days may be granted under the standards of Section 309(f)
     of the Communications Act where extraordinary circumstances
     so require. Extensions of the temporary authorization for a
     period of 180 days each may also be granted, but the
     applicant bears a heavy burden to show that extraordinary
     circumstances warrant such an extension.
           (d) In cases of emergency found by the Commission,
     involving danger to life or property or due to damage of
     equipment, or during a national emergency proclaimed by the
     president or declared by the Congress or during the
     continuance of any war in which the United States is engaged
     and when such action is necessary for the national defense
     or safety or otherwise in furtherance of the war effort, or
     in cases of emergency where the Commission finds that it
     would not be feasible to secure renewal applications from
     existing licensees or otherwise to follow normal licensing
     procedure, the Commission will grant radio station
     authorizations and station licenses, or modifications or
     renewals thereof, during the emergency found by the
     Commission or during the continuance of any such national
     emergency or war, as special temporary licenses, only for the
     period of emergency or war requiring such action, without the
     filing of formal applications.” 47 C.F.R. § 24.825 (1995).
We hold that the possibility of an FCC temporary grant of use of the
license does not render the grant of a license to a high bidder
unconditional.

                                   45


(“A debtor incurs a debt when he becomes legally

obligated to pay it.”) (citing Sherman v. First City Bank (In re United

Sciences of Am.), 

, 724 (5th Cir. 1990); In re Emerald Oil

Co., 

, 837 (5th Cir. 1983)). Therefore, we conclude that

the bankruptcy court properly determined January 27, 1997 as the

appropriate date to evaluate the avoidance motion. With respect to this

issue, the FCC’s challenge fails, and we affirm the avoidance of the

approximately $894 million of the obligation of the subsidiary debtors

(and of any such obligation of GWI PCS) to the FCC.

                              Conclusion

     For the reasons stated, the judgment of the district court is

AFFIRMED.




                                  46