The New York district judge ruling on the bankruptcy reorganisation plan for DBSD North America, has dismissed a motion from two of its creditors, DISH Network and Sprint Nextel, that if the FCC approves the current reorganisation plan then they would…
The New York district judge ruling on the bankruptcy reorganisation plan for DBSD North America, has dismissed a motion from two of its creditors, DISH Network and Sprint Nextel, that if the FCC approves the current reorganisation plan then they would have a period of 14 days to present a rival bankruptcy plan for consideration.
The decision means that if the FCC gives its approval then the plan would go ahead regardless of DISH and Sprint’s wishes and DBSD would finally exit Chapter 11 bankruptcy protection. In response, DISH and Sprint have launched an appeal with the 2nd US Circuit Court of Appeals to overturn the lower court ruling that upheld the plan. SatelliteFinance understand that this appeals process could take a number of months, as could the FCC’s decision.
At the end of October, Judge Robert Gerber of the US Bankruptcy Court for the Southern District of New York ruled in favour of DBSD’s proposed reorganisation plan that would see the holders of its outstanding US$750m of convertible senior secured 7.5% notes, due 2009, swap their debt for 95% of the equity in the new DBSD with ICO Global owning the remaining 5%, as well warrants for an additional 10%. As the plan involves a change of control and the transfer of the ownership of DBSD’s North American spectrum licence, it has to be approved by the FCC.
In what has widely been seen as a ‘loan-to-own’ strategy, DISH purchased all of the first lien-secured debt at a discount from the pre-petition lenders in July 2009. It also snapped up a portion, thought to be around 15%, of the US$752m of second lien debt (the convertible senior notes). However, the Ad Hoc Committee representing the majority of DBSD noteholders voted overwhelmingly in favour of the original reorganisation plan, meaning that DISH was outvoted. Sprint is the largest of the unsecured creditors in DBSD.
DBSD is being advised on the restructuring process by Jefferies & Company, Kirkland and Ellis and Davis Wright Tremaine. UBS Securities and Milbank, Tweed, Hadley & McCloy are advising the principal noteholders. Linklaters and K&L Gates are advising DISH Network and Sprint respectively, while Curtis, Mallet-Prevost, Colt & Mosle are acting as attorneys for a committee of unsecured creditors.
