US Trustee objects Intelsat bankruptcy model
August 31, 2021
The judge in Intelsat’s Chapter 11 bankruptcy has already overruled the US Trustee’s strongly voiced objections to the future hearings in the Intelsat case being heard in private (‘under seal’) and not open to the public or other interested parties. The Trustee, in a formal motion to the court on August 30th, again mounted a spirited action complaining that Intelsat is not complying with the Requirements of Bankruptcy Rule.
The US Trustee reminds the court that 28 days must be allowed for “parties of interest” to raise their comments following on from Intelsat’s Amended [Bankruptcy] Exit Plan.
“Here, [Intelsat] seek to reduce the time for parties to object to the adequacy of the Amended Disclosure Statement from the required 28 days to just three and a half business days,” argues the US Trustee.
The Trustee states: “The Amended Disclosure Statement was filed late at night on August 24th 2021. The Debtors set the deadline to object to the Amended Disclosure Statement for August 30th 2021, at noon, and scheduled the hearing on approval of the Amended Disclosure Statement for September 1st 2021 at 11:00am.”
“This timeline is at variance with the 28-days objection deadline required by [the] Bankruptcy Rules,” says the US Trustee, and adds: “These notice requirements are not mere procedural technicalities. The failure to provide a creditor with formal notice in time to file an objection to a disclosure statement or plan confirmation may violate due process and render the plan ineffective as to such creditor.”
“The Amended Plan, and the Amended Disclosure Statement that describes it, have undergone significant changes since the original was filed. Moreover, the changes and proposed restructuring of the Debtors are quite complicated. The Debtors provide no justification for suddenly shortening the time for parties in interest to review and object to the Amended Disclosure Statement,” adds the Trustee.
The action asks the court to allow 28 days for comments and objections to be heard.
Moreover, the US Trustee says the requests in Intelsat’s Amended Plan which cover the management’s incentive plan (MIP, for payments and shares to be allocated to Intelsat’s top 8 executives) is also an infringement. The Trustee states that this is in direct violation of the Bankruptcy Code and in particular quotes the notorious Enron and WoldCom cases. This MIP requires the bankruptcy court to review whether payments made outside of the ordinary course of business are justified.
“It is unclear whether the board of the Reorganised Debtors is constituted by the members of the present board or whether the present board is really the one proposing and implementing the MIP,” argues the Trustee.