Intelsat secures court approval of mediation, exclusivity extension

By Sarah Lizee

Olympia, Wash., April 20 – Intelsat SA secured court approval of mediation of its Chapter 11 plan and confirmation-related disputes, and also received an extension of its exclusive periods to file and solicit votes on a Chapter 11 plan, according to docket entries filed Tuesday with the U.S. Bankruptcy Court for the Eastern District of Virginia.

Mediation

The company said it filed its plan with support of significant creditors at every level of the capital structure.

Since then, the debtors have made substantial progress in narrowing the gap between the large creditor constituents that support the plan and the large constituent that does not.

These discussions, however, have yet to yield a comprehensive resolution, Intelsat said.

The company said the economic gap that remains between the parties’ latest proposals is narrow at around $70 million.

“Given the importance of progressing the cases efficiently and the narrow economic gap that remains, further targeted negotiations on economic and other terms facilitated by a sitting bankruptcy judge would be preferable for the estates over the alternative – significant, value-destructive litigation that will ultimately cost the estates more than the amount in dispute,” the company said.

“And for this same simple fact – that the disputes represent tiny fractions of recoveries to stakeholders – the debtors believe that a focused mediation will be efficient, successful and value-maximizing.

“Indeed, at this point in this extremely complex case, all stakeholders would benefit from the views of an independent third party to provide candid feedback on their position and further objective suggestions to aid the debtors in resolving these disputes.”

The debtors’ proposed order would require key stakeholders in the Chapter 11 cases to mediate in good faith until a global settlement is reached or the mediator declares the parties to be at impasse, whichever occurs first.

Exclusivity extension

The company had asked the court to extend the plan filing period through Nov. 13 and the solicitation period through Jan. 13, 2022.

Intelsat said it has worked with five special committees, five disparate informal groups, and the official committee of unsecured creditors to investigate historical transactions, the past and potential future use of complex tax attributes and parties’ relative rights, the acquisition of a new business, the development of that business plan and design of an optimized capital structure, and the negotiation of a comprehensive resolution to the Chapter 11 cases.

The company said the debtors are also working to maximize the value of their most valuable asset – the ability to operate within the C-band spectrum – by pursuing a clearing process that has required “extraordinary effort from their entire organization and has left their stakeholders poised to reap the benefits.”

“On the back of these efforts, the debtors have now reached another significant milestone in these Chapter 11 cases, the filing of the plan, that lays out the path to a restructuring that will provide the debtors with a massively deleveraged balance sheet, a fully funded business built to maximize value, and a resolution to all of the unique and complex issues that have challenged the estates,” the company said.

The plan is supported by some of the debtors’ largest creditor constituencies under a plan support agreement and, in the weeks ahead, the company hopes to continue to work with its remaining stakeholders to build maximum consensus for the plan.

“The extension of the exclusivity periods will allow the debtors to build upon their success so far in these cases and prosecute the plan with their supporting creditors, as well as continue progressing the C-band clearing process without distraction from unwarranted and unproductive competing plan proposals,” the company said.

The exclusivity motion had drawn an objection from a group that holds over 74% of Intelsat Jackson Holdings, SA’s unsecured notes, which said that it opposes the company’s proposed Chapter 11 plan.

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

“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,” the group said.

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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