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Objections to OneWeb reorganisation plan

August 24, 2020

The official Committee of OneWeb’s unsecured creditors is objecting to the current Chapter 11 exit reorganisation plan for OneWeb.

In a filing to the US Bankruptcy Court they argue that the disclosure statement from OneWeb “lacks adequate information of particular importance to the unsecured creditors.” The submission to the Court stresses that they are in favour of OneWeb proceeding as a “going concern” but additional information must be supplied.

The Committee argues that superficially the OneWeb plan is only the result of negotiations with the debt-holders of $1.6 billion of (potentially) ‘debt for equity’ promissory Notes, and the incoming Bid100 Ltd consortium of Bharti and the UK Government which is the sponsor of the restructuring scheme.

The Committee, in its filing, say: “The truth is that (even apart from the exclusion of the Committee), the Proposed Plan was negotiated by two parties, not three. The Debtors are controlled by the Purported Noteholders, who hold over 70 per cent of the Debtors’ equity as well as a controlling majority of the Debtors’ board of directors, and there is no evidence that any steps were taken or corporate formalities observed to separate what is best for the Debtors (and their estates) from what is best for the Purported Noteholders. Worse, it has become clear that the Debtors (and their insiders) have no qualms about using the proposed transaction with BidCo (the “BidCo Transaction”) — specifically, the threat of the loss of this transaction—as a sword to extract inappropriate concessions from unsecured creditors and to try to “box in” the Court with a Hobson’s choice: confirm an unconfirmable plan or lose the BidCo Transaction.”

The filing adds: “The Debtors can conduct plan negotiations in whatever manner they choose and, as long as exclusivity is in place, file whatever plan they see fit.  However, having held their negotiations and having filed their Proposed Plan, the Debtors must now demonstrate that their Proposed Plan is confirmable on its face and that they have provided adequate information and disclosures about the agreements they have reached, for all practical purposes, with themselves. The Debtors fail on both accounts.”

The Committee argues that the plan also includes “sweeping” approval for “millions of dollars” to be paid in the form of retention and severance bonuses to OneWeb executives.

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