The clash between Intelsat and SES over accelerated relocation payments from the C-band clearing continues. On April 14, Intelsat submitted an objection in its Chapter 11 court case, accusing SES of continuing a “smear campaign” against the company.
SES has lodged a $1.8 billion claim against Intelsat in its bankruptcy proceedings, claiming the two companies agreed to split C-band clearing proceeds equally, but Intelsat went back on that agreement.
In March, SES put forth a filing asking for standing to prosecute inter-company claims. In that filing, SES accused Intelsat S.A. convertible noteholders of moving C-band accelerated relocation payments away from Intelsat subsidiary Intelsat US and “move the relocation proceeds to a shell entity where creditors other than SES can more easily claim them.”
The heavily redacted March filing also mentions phone calls, emails, and communications from Intelsat senior leadership including CEO Steven Spengler; General Counsel Michelle Bryan; and CFO David Tolley that SES believes proves that Intelsat knowingly went back on its agreement with SES.
Intelsat’s April 14 filing, in response to that March SES claim, accused SES of taking a “scorched-earth approach.”
Intelsat argues, as it has before, that the agreement with SES as part of the C-Band Alliance was for a percentage of proceeds from the C-band auction in a market-based clearing approach. The FCC, however, chose to run a public auction and offer satellite operators clearing costs and specific dollar values of accelerated relocation payments.
“The acceleration payments were not a part of the market approach, nor even contemplated by the agreement [with SES],” Intelsat wrote in the filing.
Intelsat is set to receive about $1 billion more than SES to clear the C-band spectrum. Per the FCC’s final C-band order, Intelsat will receive about $4.87 billion; SES about $3.97 billion; Eutelsat about $507 million; Telesat $344 million; and Star One $15 million.
The C-band auction has concluded and its proceeds surpassed expectations. It grossed $80.9 billion, setting a record as the highest-grossing FCC auction. The satellite operators will only receive their relocation payments if they clear the spectrum on time, and reimbursement for clearing costs. Auction proceeds go to the U.S. Treasury.
Further, Intelsat said that SES will have a chance to address its claims during the bankruptcy confirmation proceedings and therefore has no standing to pursue separate proceedings.
“If SES — literally the worst imaginable fiduciary here — can secure standing to pursue a claim as a fiduciary for a single debtor, then creditors of every one of the 35 different debtor entities could (and very well may) deluge the court, on this and more serious issues, with efforts to end-run an already-filed plan that resolves these Chapter 11 cases in their entirety,” Intelsat said in the filing.
Intelsat has submitted a plan to take the company out of bankruptcy, and its approval is pending. The confirmation hearing is set for May 11.
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