Terrestar Networks is seeking a 60-day extension to the exclusive period during which only it may file a chapter 11 plan as it contemplates how to distribute the remaining proceeds from Dish’s acquisition of its assets.
On 11 August 2011, the company…
Terrestar Networks is seeking a 60-day extension to the exclusive period during which only it may file a chapter 11 plan as it contemplates how to distribute the remaining proceeds from Dish’s acquisition of its assets.
On 11 August 2011, the company received US$1.345bn of the total US$1.375bn purchase price. On that same day, the debtors repaid a little over US$975m of their secured debt obligations. A further US$90m has subsequently been deducted to pay for administrative claims and expenses as well as to find Terrestar’s operations through to the end of the year.
The remaining US$280m as well, as the final US$30m that is due to be paid shortly, is to be distributed among Terrestar’s creditors and the company has been formulating a Chapter 11 plan pursuant to which these remaining proceeds would be allocated.
However, Terrestar points out that the various inter-creditor disputes remaining in the bankruptcy case has made preparing such a plan vey complicated and it is now requesting an extension to the period in which to do so. The debtor stated that it had already secured the support of the creditors’ committee to extend the exclusivity period by 60 days.
A bankruptcy court hearing to consider the motion is to be held on 19 September.
One of the most high-profile creditor disputes is that of telecoms giant Sprint Nextel, which has filed a series objections to the agreed sale to Dish. Under the court approved plan, Sprint would receive approximately US$40m to settle its claims as an unsecured claimant. However, Sprint was not satisfied with this outcome and filed a motion for a partial summary judgment against Terrestar Networks.
In the motion, Sprint claimed the debtor’s should pay it US$104m, equivalent to the cost it incurred in acquiring the repurposing the S-band spectrum for Terrestar.
However, on 22 August the New York bankruptcy court judge who has been residing over the case, judge Sean Lane, denied Sprint’s claims.
