Loral's disclosure statement draws objection from Angelo Gordon

By Jeff Pines

Washington, Nov. 29 - Investment firm Angelo Gordon & Co. LP objected to Loral Space & Communications Ltd.'s disclosure statement, saying the court should deny approval because of the way creditors and the company settled issues of substantive consolidation.

The firm filed its objection with the U.S. Bankruptcy Court for the Southern District of New York Monday.

Angelo Gordon has claims of $19.04 million against Loral; the New York-based satellite maker estimates there are $117 million of claims in the same class as Angelo Gordon's claims. It is in the class of those who are not a creditor of the Loral parent or Loral Orion Ltd.

There are more than $730 million of Orion claims. The creditors of Loral's Orion subsidiary are estimated to recover 60%-89%, whereas Angelo Gordon will recover an estimated 30%-33% on the dollar for its claims.

The investment firm attributes the disparity to the dominance of Orion creditors on the official unsecured creditors committee.

Angelo Gordon said that the disclosure statement lacks information about the substantive consolidation. For example, it does not indicate what disputes actually existed that led to substantive consolidation, what the merits and weaknesses of the arguments were, who contended what and what is to be gained or lost by not supporting the settlement.

Further, the firm notes that Loral has an insurance claim worth between $187 million to $250 million, which without substantive consolidation would more than pay for Angelo Gordon's and others' unsecured claims in full. But instead the money will go to other creditors.

"The disclosure statement discloses no reasons or bases for why," Angelo Gordon said.

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

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