Loral Space unsecured creditors committee objects to extension

By Jeff Pines

Washington, March 12 - Loral Space & Communications Ltd may be in the "rocket science" business, but the solution to its reorganization isn't, and that's why the official committee of unsecured creditors said it objects to another extension of the company's exclusive period.

The company wants to extend its periods to file a reorganization plan to July 12 and to solicit acceptances until Sept. 10. The company's exclusive period to file a plan ends March 12.

The New York-based satellite maker is not making any "meaningful progress" towards a reorganization plan and the business plan presented to the committee in December used "wildly optimistic projections and completely unreasonable assumptions," the committee said in a March 11 filing with bankruptcy court for the Southern District of New York.

It also faults the company for not providing information it has requested.

Another issue is the company said it would get $1.1 billion from the sale of Intelsat, but instead will probably get $970 million, which is not enough to repay the secured lenders' claims, the committee said.

Even though a price reduction is not so unusual in an asset sale, what irks the committee, it said, was that the company has "constantly assured this committee and the court" the $1.1 billion price tag would not be marked down.

Loral also "literally dropped" an almost finished satellite built for Spainsat on its way from a testing facility, but the company has not yet told the committee what, if any, impact this might have on its business plan, the committee said.

The company has also said it is looking for a private equity investor, but has refused to share any information, the committee said. Instead, the creditors want Loral to develop a plan that converts their claims into equity.

As for the size and complexity of the case, the committee argued that with the sale of Intelsat, the case would be less complex, since most of the secured debt would be paid off, and size alone is not enough to justify another extension.

A hearing on the extension is scheduled for March 16.

Loral filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.