Intelsat bankruptcy exit plan “inept”

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In truth, Intelsat’s bankruptcy has been criticised by investors and creditors since Day One of its Chapter 11 process. But November 17th saw a slew of extra motions tabled and due to be heard on December 2nd by the court. In essence, the documents call for Intelsat’s Amended Exit Plan to be rejected.

Most of the motions before the court contain line after line of redacted material – and filed under seal – and most of which contain specific information which is considered confidential or commercially sensitive.

The filings say the exit plan improperly shifts most of the company’s value to one set of creditors and institutional shareholders, including hedge fund Appaloosa, at the expense of others.

One filing (of 183-pages, from the Ad Hoc Group of Convertible Noteholders) says: “Intelsat S.A. (ISA) is a debtor-in-possession. That is a title that bears meaning. It is a privilege and not a right. It carries extensive duties and responsibilities that ISA agreed to undertake in exchange for staying in control of its estate, i.e., avoiding the appointment of a trustee. Among other things, ISA’s role as debtor-in-possession required it to act diligently and independently to maximize the value of its Estate. Unfortunately, that is not what happened.”

The Ad Hoc group continued, saying “As the evidence at the Hearing will show, ISA ignored its duties and responsibilities and squandered the precious opportunity to shepherd its Estate through bankruptcy. It acted through directors who were conflicted on issues they handled and were motivated by getting releases. Those directors never made decisions independently, never did real diligence, never advocated for stakeholders, relied on conflicted advisors, forewent legitimate opportunities to obtain significantly more value, and wasted estate resources. One could not design a better hypothetical to illustrate an inept debtor-in-possession.”

Another 1617-page filing from Intelsat Jackson (a sister company of Intelsat itself but with separate borrowings and debts) and which includes documents from Luxembourg and Belgian legal authorities, argues of deliberate obfuscation given that Intelsat, having already defaulted on a $125 million interest payment saw its lawyers alerting Intelsat Jackson of its intended bankruptcy a few minutes prior to actually filing for Chapter 11.

In similar fashion, lawyers for SES filed a 542-page document which contained page after page of transcriptions of depositions (all under seal) taken from Intelsat senior staff as well as various documents concerning the C-Band Alliance “Consortium Agreement” and “Bilateral Agreement” between Intelsat and SES.

As Bloomberg Law says in its report on the court actions, “Intelsat SA is facing challenges to its Chapter 11 plan from competitor SES Americom Inc. and a group of bondholders over their concerns that other creditors are getting more favorable treatment at their expense.”

The report added: “Intelsat’s complex debt restructuring plan would reduce the satellite operator’s $15 billion debt load to about $7 billion. But it is the product of unfair deals, the objectors said in separate court filings Monday. The convertible noteholders, which purchased bonds Intelsat SA issued in 2018, said the bankrupt parent ignored its duties and responsibilities to its bondholders and equity holders. The company instead let value slip.”


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