TerreStar Networks, EchoStar deal terminated; TerreStar Corp., subsidiary file separate case

By Caroline Salls

Pittsburgh, Feb. 17 - TerreStar Networks, Inc.'s restructuring support agreement with EchoStar Corp. has been terminated by mutual agreement of both companies, according to an 8-K filed by EchoStar with the Securities and Exchange Commission.

As previously reported, TerreStar withdrew its plan of reorganization on Wednesday.

According to the 8-K, TerreStar Corp. and its TerreStar Holdings Inc. subsidiary filed their own Chapter 11 bankruptcy case on Wednesday.

TerreStar said in a Wednesday court filing that its cases will not be jointly administered with those of TerreStar Corp. and TerreStar Holdings because their plans of reorganization are expected to move forward on different timetables and will seek significantly different results because of differences in the two debtor groups' businesses and stakeholders.

According to court documents, the TerreStar Corp. debtors had $184.71 million of assets and $494.51 million of debt as of Dec. 31.

The TSC debtors' largest unsecured creditor is Elektrobit Inc. of Bothell, Wash., with a $25.75 million litigation claim. No other unsecured creditors had claims of $1 million or more.

In connection with the bankruptcy filing, the TSC debtors have secured a commitment for $13.37 million of debtor-in-possession financing. NexBank SSB is the DIP loan agent, and Solus Asset Management LP is the lender.

The facility will mature on the earliest of 12 months from closing, upon the sale of substantially all of the debtors' assets, the conversion of the Chapter 11 case and the effective date of a plan of reorganization.

Interest will be 12.5%.

The TSC debtors are represented by Akin, Gump, Strauss, Hauer & Feld, LLP.

Based in Reston, Va., TerreStar Networks is a holding company with subsidiaries that operate satellite-based digital mobile communications systems. The company filed for bankruptcy on Oct. 19, 2010 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 10-15446.

TerreStar Corp. And TerreStar Holdings' Chapter 11 case number is 11-10612.

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