The $1.8 billion legal claim by SES on Intelsat concerning the SES claim on the split of FCC’s C-band incentive payments rumbles on, but with some tough comments from an SES submission to Intelsat’s bankruptcy court.
SES filed its further motion with Intelsat’s bankruptcy court on March 3rd and wants the court to determine which Intelsat company gets the FCC’s C-band incentive payments.
The SES filing uses language that is highly specific. SES says it now has access (through legal ‘discovery’) to Intelsat’s emails and text messages and says it holds the ‘smoking gun’ that allegedly proves Intelsat’s duplicity and the filing includes – much redacted – messages from Intelsat’s CFO David Tolley and general counsel Michelle Bryan to Intelsat senior staffers. There’s also a text from CEO Steve Spengler to SES CEO Steve Collar seemingly admitting that Spengler admitted he was stabbing SES in the back.
SES says bluntly that this proves it is “game over” for Intelsat.
The motion as to ‘who gets the cash’ was focused on arguments present to the court by a group of ‘Ad Hoc’ holders of Intelsat’s debt. The debt holders want to know – in simple terms – which Intelsat division or subsidiary company by will actually get the FCC’s Accelerated Relocation Payment. SES says: “Recognising that judgment day is approaching, the Convertible Noteholders have maneuvered to try to divert these proceeds away from Intelsat US (SES’s contractual counterparty and the party that is entitled to the Accelerated Relocation Payments) and into the pockets of Intelsat entities and creditors that are mere spectators to the technical and operational work of clearing the C-Band.”
SES told the court that this is a “critical issue”. SES explains: “Intelsat US is the space station operator described in the FCC Order prescribing the C-Band clearing; Intelsat US – and not Intelsat SA or any other Intelsat entity – is actually performing the work of relocating Intelsat’s existing services to the upper 200 MHz of the C-Band; and Intelsat US is ultimately accountable to the FCC for the clearing.”
The language in the document is strong, perhaps even fierce. SES says: “At the same time, the Debtors have filed a chapter 11 plan that similarly proposes to strip value from Intelsat US and pay a miniscule recovery to Intelsat US’s unsecured creditors. This shell game is only the latest example of a disturbing pattern of deceit by Intelsat and Intelsat-affiliated individuals who, at every turn, have lied to and deprived SES from receiving its contractually agreed-upon share of the collective Accelerated Relocation Proceeds to which the companies are entitled.”
SES further argued: “Without the Court’s intervention, it is not evident that the rightful recipients of the Accelerated Relocation Payments, namely Intelsat US and its creditors, will receive the funds.”
The SES action continued: “The Chapter 11 Cases are riddled with conflicts, and Intelsat US’s representatives are violating their fiduciary duties by refusing to take action to protect Intelsat US’s right to the Accelerated Relocation Payments. The approximately $5 billion in Accelerated Relocation Payments represents a significant portion of the Debtors’ aggregate value (which the Debtors estimate to be between $10 to $11.5 billion in their Disclosure Statement); however, the Debtors’ Chapter 11 Plan and Disclosure Statement dodge the question as to which Debtor entity is actually entitled to the Accelerated Relocation Payments, and the Debtors fail to substantiate or justify Intelsat US’s nominal valuation and recovery of only 4.9 per cent for general unsecured creditors under the Chapter 11 Plan.”
SES argues its point, saying: “Left to their own devices, the Debtors will press forward with an unconfirmable Chapter 11 Plan that fails to recognise Intelsat US’s right to the Accelerated Relocation Payments, fails to allocate fair value to Intelsat US, and cheats Intelsat US’s unsecured creditors of the recovery to which they are entitled. Thus, determining the proper allocation of the Accelerated Relocation Payments is a necessary step to help reach a confirmable resolution in these Chapter 11 Cases.”
SES concludes by saying that the court should allow litigation to go ahead to determine “ownership” of the FCC’s incentive payments.
Currently, the motion is due to be heard on March 17th, although the date set for the wider legal claim by SES (for $1.8 billion) is set for June 28th and is scheduled to last two weeks.