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Intelsat’s Chapter 11 exit plan falters

April 12, 2021

By Chris Forrester

Intelsat is asking its Chapter 11 bankruptcy court for more time to deliver its exit plan from bankruptcy.

A hearing scheduled for April 14th will see Judge Phillips asked for more time. Intelsat says the additional time is necessary to ensure that it maintains control of its case, which is particularly complicated because of the dozens of subsidiary and sister businesses under various Intelsat names all of which are affected by the bankruptcy.

This move is being objected to by various interested parties and in particular debt-holders to Intelsat businesses.

One objection says: “On February 12, 2021, after approximately nine months in Chapter 11, a five-month exclusivity extension, and months of plan negotiations, the Debtors claimed to have achieved a “significant milestone” in these cases — the filing of a Chapter 11 plan. But this is not as much of an achievement as the Debtors purport it to be. The Debtors’ proposed Plan is opposed by their largest creditor group constituency — the Jackson Crossover Group, which holds over 74 percent of the Jackson Unsecured Notes and over 46 percent ($6.9 billion) of the Debtors’ entire funded debt.”

Under the proposed exit plan, says the objectors, they would receive about 55 cents on the dollar in compensation which would be about $3 billion short of payment in full. Moreover, the objectors say that other classes of debt, all of which are ‘junior’ in status, would receive “massive distributions” under the plan.

Therefore, says the objectors, the current plan is “dead in the water”. They allege that Intelsat has “painted itself into a corner” and have created a logjam.

The objectors are asking the bankruptcy court to deny more time and instead for the court to focus on Intelsat Jackson where the company’s assets are held. Intelsat Jackson holds $11.75 billion of recognised debts.

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