[arin-ppml] Bankruptcy transfers

[John Curran]

On Jun 20, 2012, at 11:31 PM, sandrabrown at ipv4marketgroup.com wrote:

> The Final Court Documents are published at
> http://dm.epiq11.com/NNI/Docket#Debtors=2414&RelatedDocketId=&ds=true&maxPerPage=25&page=1
> It is document 5315 and dated 04/26/2011.

That is just the final order document.  Let's be a little more precise -

Document 5315 is the final order document (04/26/2011)
Document 5283 is Industry Canada's removal of their objection based on
                 the revisions proposed by Microsoft and ARIN (04/20/2011)
Document 5280 is Nortel's reply to Industry Canada's objection (04/20/2011)
Document 5253 is Industry Canada's objection to the transfer (04/15/2011)
Document 5252 is the proposed Revised Order and Amended Purchase Agreement 
                 redlines of same, and related documents (04/15/2011)

> Please note in the Asset Purchase Agreement at
> http://www.scribd.com/doc/51547565/Nortel-s-Chapter-11-Motion-for-the-Sale-of-Internet-Numbers
> that there is a reference to updating the POC but there is no mention or
> dependence on signing of an LRSA.

Sandra - However, the actual executed Amended Purchase Agreement 
both references and depends on signing of an LRSA.  I would agree
that anyone interested in this case should please read the entire 
set of documents to form their own opinions based on the guidance
of their own legal counsel. 

Regarding the meaning of the ruling, one may find Nortel's own 
reply (#5280) to Industry Canada's objection particularly lucid:

> "8. In the Statement, Industry Canada raises two purported objections to the Proposed Transaction: (i) that the Debtors claim to have a property interest in the Internet numbers, rather than a simple right of use, and (ii) that the Debtors contend that “legacy” numbers assigned before ARIN was established, like the Internet Numbers, are not subject to ARIN’s transfer restrictions.
> 
> While the Debtors believe that each of those statements are correct, and are prepared to prove and defend each of those facts, in considering whether to approve the Amended Purchase Agreement and enter the Revised Order, the Court is not being asked to rule on either of these points.
> 

> 9. First, under the Amended Sale Agreement NNI is proposing to transfer only the “Seller’s Rights” to the Internet Numbers, defined as “Seller’s exclusive right to use the Legacy Number Blocks, Seller’s exclusive right to transfer the Legacy Number Blocks, and any other legal and equitable rights the Seller may have in and to, the Legacy Number Blocks.” The Revised Order incorporates similar provisions.
> 
> 10. Second, the revisions reflected in the Amended Sale Agreement and Revised Order were the result of negotiations between Microsoft, ARIN and NNI and, accordingly, ARIN’s counsel has informed NNI that it does not oppose entry of the Revised Order. "

By Nortel's own filing, the Court was not being asked to rule on the Nortel's 
original claim of a property interest, nor Nortel's claim that legacy numbers 
are not subject to ARIN's transfer restrictions, as these were claims were
removed from the revised filings.

The Amended Sale Agreement (and Revised Order) instead only transfers Nortel's 
Rights; these changes were the results of negotiations between Microsoft, ARIN, 
and Nortel, and accordingly ARIN did not oppose entry of the revised order.

Industry Canada's objection #5283 is also enlightening, even if not germane 
to determination of any alleged 'precedent setting nature' of this transfer.
(Parties may also want to review some of the other bankruptcy cases involving
IP number resources, as they have much more explicit language per Steve Ryan's
BNA article; see my attached earlier email on this topic)

FYI,
/John

John Curran
President and CEO
ARIN

===

Begin forwarded message:

> From: John Curran <jcurran at corp.arin.net>
> Subject: Re: [arin-ppml] ARIN-prop-171 Section 8.4 Modifications: ASN and legacy resources
> Date: June 13, 2012 12:05:01 AM EDT
> To: Mike Burns <mike at nationwideinc.com>
> Cc: "arin-ppml at arin.net" <ARIN-PPML at arin.net>
> 
> On Jun 12, 2012, at 3:16 PM, Mike Burns wrote:
> 
>> Nortel was found to have exclusive right to transfer addresses allocated to another company, say Bay Networks, which was acquired by Nortel.
>> So presumably Bay Networks, the original registrant, had some right to transfer blocks to Nortel without ARIN's involvement. From the judge's order:
>> ‘‘The Seller has the exclusive right to use the Internet
>> Numbers and the exclusive right to transfer its exclusive
>> right to use the Internet Numbers."
> 
> Mike - There have been several bankruptcy cases involving transfers of IPv4
> addresses (you can find several listed on slide 3 of my recent "Update on IPv4 
> Transfers" presentation at NANOG 55 - http://teamarin.net/event/nanog-55/)  
> ARIN processed these transfers because they met the policy for IPv4 transfers
> as set by the community.
> 
>> Again from the judge :‘‘The Seller has the exclusive right to use the Internet
>> Numbers and the exclusive right to transfer its exclusive
>> right to use the Internet Numbers."
> 
> The original sale order would have transferred Nortel's rights and interests 
> "free and clear" to Microsoft.  ARIN filed an objection with the court, and 
> the parties were able to work out an amended sale and court order which was
> satisfactory. The parties (Nortel and Microsoft) jointed submitted a revised 
> sales order that said the addresses "will be placed under a registration 
> services agreement (LRSA) between ARIN and Microsoft", and draft court order 
> that read  "For avoidance of doubt, this Order shall not affect the LRSA and 
> Purchaser's rights in Internet Numbers transferred pursuant to this Order shall 
> be subject to the terms of the LRSA".  ARIN found such that requirement to be 
> sufficient to provide for the necessary compliance with the community policy.
> 
> You will find even more precise language in all of the subsequent bankruptcy
> court orders,  e.g. in the case of the Borders transfer - 
> 
> " F. Other Provisions.
> 
> 14. Notwithstanding anything herein to the contrary, including, without limitation, paragraphs J, 3-8, 11 and 16, hereof, (i) the IA Sale, as stated in the Agreements, is conditioned upon ARIN’s consent including any terms and/or conditions established by ARIN’s transfer policies or any other policies, guidelines, or regulations developed by ARIN and published on its website, as may be amended and supplemented from time to time (collectively, “ARIN’s Policies”), (ii) the transfer of the Debtors’ interests in the Internet Addresses to the Purchaser is subject to ARIN’s Policies, (iii) the Debtors and the Purchaser are required to comply with ARIN’s Policies before any transfer of the Debtors’ rights in the Internet Addresses may be effectuated.; (iv) ARIN is not required to take any action in violation of ARIN’s Policies in connection with or as a consequence of this Order, the IA Sale, or the Agreements, nor shall ARIN be required to apply a different standard to the transfer of the Internet Addresses than it does to the transfer of non-legacy Internet Protocol numbers. Nothing in this Order is intended, nor shall be construed, as exempting the Debtors and Purchaser from complying with the ARIN Policies. Subject to the conditions set forth in this paragraph, ARIN has approved of the transfer as contemplated herein and shall take reasonable steps to provide assistance for the transfer as contemplated in this Order. "
> 
> On the other hand, you already knew of both of these cases, and neither of 
> them are the result of parties which ended up in disagreement (which is most 
> likely when these matters will really be decided with far more certainty)
> 
>> And where is  your documentation or supporting law to assert that ARIN's post-hoc policies apply to legacy addresses?
>> As far a my documentation or case law, 
>> ...
> 
> It's quite interesting; we've already agreed that these matters are likely 
> to decided in courts, and yet you continue to try and argue legal positions
> on this mailing list in advance of that event.
> 
> ARIN is highly likely to be a party in such proceedings, and hence must decline 
> to participate in publicly outlining our legal strategy for obvious reasons.  
> (It would be really nice to get this settled, but that obviously takes more 
> than just ARIN...)
> 
> Today we have an active IPv4 transfer market, and this includes an ever-growing
> list of bankruptcy-related transfers completed where the address holders and 
> service providers involved simply followed the policies set by the community 
> for IPv4 specified transfers.  It is "running code" and has become rather 
> well-understood, including facilitators to help parties with their requests.
> I expect to see this significantly increase over time, and soon include some
> transfers to parties in other regions per recently adopted policy changes.
> 
> Discussion of further changes to policies is quite welcome and it would be good 
> if we could get back to that - you probably need to talk with someone else about
> "property which is neither registration rights nor related to the operator 
> community's use of IP addresses", as it doesn't appear to be related to ARIN
> or its mission as a registry in the management of the IP address space in the 
> region.
> 
> Thanks!
> /John
> 
> John Curran
> President and CEO
> ARIN