Intelsat creditors assault bankruptcy prepare, say board conflicted

A trader passes by a screen displaying the tickers symbols for Bristol-Myers Squibb and Intelsat, Ltd. on the floor at the New York Stock Trade, April 25, 2013. REUTERS/Brendan McDermid

(Reuters) – Intelsat SA is dealing with increasing opposition to its proposed reorganization system as particular collectors and shareholders accuse the satellite communications company of caving to the calls for of a single favored creditor group and failing to carry out an neutral probe into pre-personal bankruptcy transactions.

In court docket papers filed on Monday, a team of noteholders urged U.S. Individual bankruptcy Judge Keith Phillips in Richmond, Virginia to reject the strategy, saying it improperly shifts most of the company’s price to just one set of creditors and institutional shareholders, which includes hedge fund Appaloosa, at the cost of other folks.

The prepare, if accredited, would lower Intelsat’s credit card debt from $15 billion to $7 billion and hand manage of the company in excess of to unsecured bondholders of subsidiary Intelsat Jackson Holdings SA.

Intelsat filed for bankruptcy in Could 2020 to restructure its personal debt as it well prepared to transfer some of its C-band spectrum to the U.S. Federal Communications Commission. In exchange, Intelsat is getting about $4.9 billion.

The noteholder team also accused directors that signed off on the approach of staying conflicted and settling selected statements to defend by themselves against potential legal responsibility arising from pre-bankruptcy transactions, which include restructuring bargains, conclusions relating to the FCC payments and accusations of insider trading. The noteholders allege that the directors agreed to the “favored” creditor group’s requires right after it threatened to sue them individually.

“The [Intelsat] Board was worried into submission,” the team claimed.

Intelsat competitor SES Americom Inc, which says Intelsat owes it $421 million below an settlement to split the FCC payments, also filed an objection. SES argues that the U.S. device with which it signed the arrangement is central to the company’s in general operations and is entitled to far a lot more than the 4.5% of the FCC payments that it is really established to acquire under the plan. A more substantial chunk of the FCC payments would outcome in better payouts to SES, which claims it is at present in line for pennies on the greenback.

SES echoed the noteholder group’s allegations that the administrators building selections about the program had been conflicted.

A smaller team of equity holders, whose passions will be wiped out under the prepare, objected to the approach, indicating it ignores opportunities to provide in much more price. The team also challenged the plan’s proposed authorized protections for officers and directors.

A hearing on the system is set to start on Dec. 2.

The situation is In re Intelsat SA, U.S. Individual bankruptcy Courtroom, Jap District of Virginia, No. 20-32299.

For Intelsat: Edward Sassower, Steven Serajeddini and Aparna Yenamandra of Kirkland & Ellis and Michael Condyles, Peter Barrett, Jeremy Williams and Brian Richardson of Kutak Rock

For the noteholder team: Kristopher Hansen, Daniel Fliman,

Sayan Bhattacharyya, Patrick Petrocelli and Isaac Sasson of Stroock & Stroock & Lavan Duane Loft of Boies Schiller Flexner and Jason Gold and Dylan Trache of Nelson Mullins Riley & Scarborough

For SES Americom: Orin Snyder, Michael Rosenthal, Brian Lutz, and Christopher Belelieu of Gibson, Dunn & Crutcher and Dennis Lewandowski of Kaufman & Canoles

For the equity group: Harold Kaplan, Mark Hebbeln and Susan Poll Klaessy of Foley & Lardner and David Kovel of Kirby McInerney

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Intelsat choose aims to delay essential bankruptcy strategy hearing