TerreStar Networks: court OKs bid procedures for proposed asset sale

By Lisa Kerner

Charlotte, N.C., May 5 - TerreStar Networks Inc.'s bid procedures for the proposed sale of substantially all of its assets were approved by the U.S. Bankruptcy Court for the Southern District of New York, according to an attorney familiar with the case on Wednesday.

Under the proposed bid procedures, bids for substantially all of TerreStar's assets would be due by 5 p.m. ET on June 8. The auction would be held on June 15, and the sale hearing would be scheduled for June 20.

All bids must include a 5% deposit and must not require payment of a breakup fee or expense reimbursement. However, TerreStar said it could decide to select a stalking horse bidder at any time up to five days before the auction and grant that bidder breakup fee and expense reimbursement protections.

Bids at auction must be made in minimum increments of $10 million.

As previously reported the company originally planned to proceed with a plan of reorganization sponsored by EchoStar Corp. but withdrew that plan due to a lack of support for its approval.

Since then, TerreStar said it has been in talks with its major creditor constituencies in an attempt to resolve numerous inter-creditor disputes and to explore alternative paths for an exit from Chapter 11.

And while TerreStar had been in discussions with an informal group of its 15% senior secured payment-in-kind noteholders on the terms of a junior debtor-in-possession facility and the terms of a consensual restructuring, no agreement was reached.

TerreStar then tested the market for an asset sale.

Based in Reston, Va., TerreStar is a holding company with subsidiaries that operate satellite-based digital mobile communications systems. The company filed for bankruptcy on Oct. 19. The Chapter 11 case number is 10-15446.

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