C-Band: SES wants $1.8bn from bankrupt Intelsat
July 15, 2020
By Chris Forrester
SES Americom, the US division of the Luxemburg-based satellite operator, is seeking $1.8 billion (€1.5bn) in damages from Intelsat which is in bankruptcy.
SES is alleging that Intelsat has breached the contract between the two operators which was agreed to handle the sale of C-band frequencies over the US.
The SES filing, lodged on July 14th, argues that Intelsat and its subsidiary entities are in violation of that contract and related fiduciary duties related to the C-band consortium agreement.
SES seeks compensation and punitive damages. It also wants attorney fees and other expenses in relation to arguing the C-band claim and costs relating to litigating the claim.
The claim states: “SES and Intelsat, two of the largest satellite operators in the United States, possess valuable licenses to transmit video and other data using a band of electromagnetic spectrum known as the C-Band. The events leading to this action arise from a written agreement entered into by SES, Intelsat, and others (the “Consortium Agreement”) in light of the FCC’s proposal to reallocate all or part of the C-Band from satellite service to terrestrial service for high-speed fifth-generation (“5G”) mobile wireless networks.”
The claim continues: “The Consortium Agreement establishes SES and Intelsat as the lead members of the ‘C-Band Alliance’ and requires the companies that make up the CBA to work together as a unit to facilitate the transition of the C-Band. Under the Consortium Agreement, SES and Intelsat agreed to split both control of the CBA and the vast majority of its proceeds, with a percentage going to the other members of the CBA and to cover the CBA’s costs.”
The claim argues that for 16 months the parties jointly handled submissions to the FCC; “The parties continued to work together for months, with the Debtors repeatedly affirming the Consortium Agreement through words and both private and public conduct.”
“But after the FCC issued its draft order on February 7, 2020, which set forth the payment terms for the incentive payments to the satellite operators and allocated a higher share of the overall payments to Intelsat, Intelsat repudiated its obligations under the Consortium Agreement, including its obligations to split the proceeds received by Intelsat and SES evenly. By this breach, the Debtors attempt to lay claim to approximately $450 million in payments rightfully belonging to SES under the agreed-upon 50/50 split in the Consortium Agreement. This Proof of Claim is for the damages that SES has suffered, or will in the future suffer, as a result of Intelsat’s breaches of the Consortium Agreement, breach of Intelsat’s fiduciary duties arising in connection with the Consortium Agreement, Intelsat’s unjust enrichment at SES’s expense and other related tortious conduct by Intelsat. Such damages are in an amount, including compensatory and punitive damages, not less than $1.8 billion dollars,” the claim states.