More detail has emerged on the news that a number of Dish Network creditors have written to the company alleging that the Charlie Ergen-backed pay-TV broadcaster engaged in an “illegal” restructuring when it – in effect – merged with EchoStar. They are demanding that the merger be reversed.

This is unlikely to happen so the only consequence might be another potential legal action for Ergen and his lawyers.

The creditors are using the very well-known law firm of Millbank as their advisors. The creditor group argued in the letter sent January 19th that that the company’s plan to swap nearly $10 billion of debt for new secured notes violates debtholder agreements. The letter reportedly also alleges that Dish’s move to transfer prized assets away from existing creditors could be considered fraudulent, and an illegal dividend.

Dish creditors have been complaining since the beginning of January when Dish moved assets including its potentially highly valuable wireless spectrum licences out of reach of existing bondholders. It later proposed exchanging $4.9 billion of convertible notes and $5 billion of bonds for new securities issued by its parent company EchoStar and secured by the wireless licences and 3 million TV subscribers.

Categories: Articles, Business

Tags: charlie ergen, dish, Dish Network, Echostar