Intelsat Jackson unsecured noteholders object to exclusivity motion

By Sarah Lizee

Olympia, Wash., April 8 – Intelsat SA’s motion for a nine-month extension of its exclusive plan periods drew an objection from a group that holds over 74% of Intelsat Jackson Holdings, SA’s unsecured notes, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The group, which holds over 46%, or $6.9 billion, of the debtors’ entire funded debt, said it opposes the company’s proposed Chapter 11 plan, mainly because the Jackson unsecured notes can expect a recovery of just 55.3 cents on the dollar, which is about $3 billion short of payment in full.

The group said that it had developed and proposed to the debtors a plan structure that would allow Intelsat Jackson to confirm a plan and emerge from Chapter 11 independently of its parent companies if a global settlement among all debtors is not achievable at a reasonable price.

“Incredibly, rather than agreeing to implement a plan that would allow the debtors’ operating companies and all of their employees to emerge from the shadow of Chapter 11 and focus on their businesses, the debtors – apparently in consultation with the creditors of Jackson’s parent companies – instead raised the threat that Jackson’s HoldCo parent companies would never let a ‘Jackson-only’ restructuring happen,” the group said.

The group said there is no basis for the diversion of value when Intelsat Jackson is insolvent and the absolute priority rule prohibits distributions of its value to the structurally subordinated holders of its worthless equity.

“The debtors themselves appear to recognize that they have painted themselves into a corner,” the group said, noting that about two and half weeks after filing the plan, the debtors continued the hearing on the disclosure statement and recommenced negotiations with the Intelsat Jackson noteholders.

“But the debtors remain bound to their deal with the HoldCo creditors, which have inhibited their ability to negotiate with the Jackson crossover group and will continue to inhibit negotiations,” the group said.

On April 6, the debtors filed a motion seeking mediation relating to the plan disputes, as previously reported.

“Although mediation may help, the interests of Jackson’s creditors, businesses and employees should not remain hostage to the financial challenges confronting their out-of-the-money shareholders,” the group said.

“The only way to assure that their separate interests will be advanced is to terminate exclusivity so that persons having economic interests in Jackson can promptly address its financial affairs in a plan that addresses its challenges and opportunities.”

Intelsat is a Luxembourg-based satellite telecommunications company. The company filed bankruptcy on May 14, 2020 under Chapter 11 case number 20-32299.

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