Dumb Diligence at iPCS Creditors
The Sprint PCS network is actually made up of Sprint-owned networks, plus coverage provided by around a dozen major ‘affiliates’, who operate like franchises. Over the past year or so, Sprint PCS affiliates have entered tough financial times as Sprint PCS has reduced the inbound roaming rate the affiliates earn from 20 cents to 5.8 cents. Now that an affiliate, iPCS, has filed for Chapter 11 bankruptcy, a group of creditors is asking for legal permission to pursue Sprint PCS to make good on their creditor claims for iPCS. The creditors claim that iPCS’s fate was dominated and controlled by Sprint PCS, thus Sprint is the real entity that is liable for their loans. Does this sound a little weird? iPCS is an independent company, and any creditors who loaned it money should have considered it as such, and performed due diligence to assess risk factors. If their suit works, I’m going to sue the people of the United States for reparations for my failed investment in Pets.com. Pets.com’s fate was dominated and controlled by US consumers, who failed to shop there.
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