Intelsat Common Shareholders Denied Representation in Bankruptcy Court
The United States Trustee overseeing Intelsat’s Chapter 11 bankruptcy case has decided against forming an equity committee of common shareholders at this time.
In a letter to the ad hoc committee of shareholders dated June 4 that was shared with Via Satellite, U.S. Acting Trustee John Fitzgerald III said the U.S. Trustee was not inclined to form an equity committee but “reserves the right to revisit the issue in the future as the case evolves.”
A group of 73 Intelsat shareholders representing 2.3 million shares sent a letter to the U.S. Trustee in May asking for an equity committee to represent them. “[Intelsat] management deliberately defaulted on a debt payment when they had the cash on hand to pay. They also stated that the bankruptcy was only necessary to acquire a bridge loan that would allow the company to move forward on a lucrative 5G FCC contract. After filing for bankruptcy, management revealed that they had sourced the bridge loan internally, but now wished to use this opportunity for a full restructure. Wiping out shareholders would seem to be management’s logical next step – given such a lack of transparency,” the letter reads.
The shareholder leading the committee, who asked to be identified only by his first name Val, said he has since sold his Intelsat shares. He has compared the company to a dishonest husband or boyfriend that breaks the trust in a relationship.
“Shareholders should most definitely receive something, however, all the signs are there that shares will be extinguished — which I personally feel is criminal,” he said. “However, back to the cheating boyfriend analogy — rather than try to rehabilitate and salvage the bastard, easier to just move on to one that’s not broken.”