Intelsat, shareholders dispute over bankruptcy investigator’s request

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A trader walks past a screen showing the ticker symbols for Bristol-Myers Squibb and Intelsat, Ltd. on the trading floor of the New York Stock Exchange, April 25, 2013. Global stock markets rose Thursday as solid corporate earnings and data pointing to the U.S. The labor market remains resilient despite signs of slower growth, fueling optimism about the economy, an outlook that drove bond prices down. REUTERS / Brendan McDermid (UNITED STATES – Tags: BUSINESS)

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(Reuters) – A group of Intelsat SA shareholders will campaign on Wednesday for the appointment of an independent auditor to investigate potential areas of value they believe the bankrupt satellite operator has overlooked.

Intelsat, which is about six weeks away from a hearing on its proposed reorganization plan, says the request is a last-ditch effort to get some leverage from shareholders who are expected to see little to nothing under the plan. On the flip side, the stock group says Intelsat has completely ignored valuable net operating losses and potential causes of action that it believes may bring some recovery to shareholders.

The satellite operator, represented by Kirkland & Ellis, filed for bankruptcy in Virginia in May 2020 on the spectrum to set up a 5G network. In return, Intelsat will receive approximately $ 4.9 billion from the FCC.

The stock group, which represents retail owners of about 2% of Intelsat stock, says the reorganization was designed to benefit Intelsat subsidiaries at the expense of the ultimate parent company, whose shares they hold. An auditor is needed to check the full value of the company’s assets as it has been “ignored or devalued without explanation” in the plan, the group said in Court documents.

Institutional shareholders, including Cyrus Capital Partners and Appaloosa, are not part of the group seeking an auditor.

The proposed plan aims to reduce Intelsat’s debt stack from $ 15 billion to approximately $ 7 billion. A hearing on the plan, backed by about 75% of the company’s debtors, is scheduled for November 8th before US bankruptcy judge Keith Phillips.

The stock group will file their application for an examiner in front of Phillips on Wednesday. Represented by Foley & Lardner and Kirby McInerney, she says the plan ignores the billions of dollars in net operating losses that are owned directly by Intelsat and not its subsidiaries and should be kept for the company’s shareholders.

Shareholders also argue that under Luxembourg law, there could be valuable claims against Intelsat’s management and board of directors related to the loss of billions of dollars in stock market value just prior to filing for bankruptcy.

Intelsat, meanwhile, says the stock group had an opportunity to request relevant documents to answer some of their questions, but did not make the requests and did not provide examples of requested information about these assets that it did not receive.

“At this point, the motion is an abuse of procedure that would serve no purpose other than delay, obstruction and additional costs,” Intelsat said in its Objection for movement.

The group has made several unsuccessful attempts to be recognized as an official committee in bankruptcy proceedings.

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 share group: Harold Kaplan, Mark Hebbeln and Susan Poll Klaessy from Foley & Lardner; and David Kovel by Kirby McInerney

Continue reading:

After a year of bankruptcy, Intelsat must be tried by creditors to take control of the restructuring

Reporting by Maria Chutchian


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