Intelsat bankruptcy judge dismisses fairness appeal for examiner
- Action group claims Intelsat ignored potential mismanagement allegations
- Judge says too little time to investigate
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(Reuters) – The judge overseeing the bankruptcy of satellite operator Intelsat SA has rejected a request by a group of shareholders to bring in an independent reviewer to investigate allegations of potential mismanagement and other means of ‘bring more money to creditors than they say the company has ignored.
U.S. bankruptcy judge Keith Phillips in Richmond, Va., Rendered his ruling in a virtual hearing on Wednesday, about 40 days before he was ready to consider Intelsat’s proposed reorganization plan for approval. The judge said he did not believe there was enough time before the confirmation hearing for an examiner to conduct a serious investigation.
As part of the plan, Intelsat, represented by Kirkland & Ellis, would reduce its debt from $ 15 billion to $ 7 billion and give control of the company to the holders of unsecured bonds of the subsidiary Intelsat Jackson Holdings SA. The plan faces opposition from another group of bondholders.
The stake group, which represents around 2% of Intelsat SA shareholders, argued that the plan was ill-conceived only to benefit the creditors of Intelsat subsidiaries, rather than the creditors and shareholders of the parent entity. The group, represented by Kirby McInerney and Foley & Lardner, said a reviewer should be called in to investigate tax benefits and potential mismanagement claims against executives, among other areas of potential value that could boost recoveries. from the creditors of Intelsat SA.
The company said, however, that it was too late in the game to call in a reviewer. Phillips agreed, saying he didn’t think an examiner would have enough time to get up to speed before the November 8 plan confirmation hearing.
The judge, however, left the door open for the equity group to review the petition if it rejected Intelsat’s request to confirm its reorganization plan in November.
“I don’t know what will happen during the confirmation of charges hearing,” he said.
An attorney for the equity group, David Kovel, declined to comment on the judge’s ruling.
Intelsat filed for bankruptcy in May 2020, saying it needed to restructure as it prepared to transfer some of its so-called C-band spectrum to the United States Federal Communications Commission, which planned to use the spectrum to build a 5G network. In return, Intelsat receives approximately $ 4.9 billion from the FCC.
The case is In re Intelsat SA, US Bankruptcy Court, Eastern 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 Equity Group: Harold Kaplan, Mark Hebbeln and Susan Poll Klaessy of Foley & Lardner; and David Kovel of Kirby McInerney
Intelsat and shareholders clash over bankruptcy reviewer application
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Reporting by Maria Chutchian