Loral Space & Communications reorganization plan draws objections

By Caroline Salls

Pittsburgh, July 7 - Loral Space & Communications, Ltd.'s plan of reorganization drew multiple objections, according to Thursday filings with the U.S. Bankruptcy Court for the Southern District of New York.

Loral's official committee of equity security holders said the plan "wipes out the equity interests of [Loral's] many thousands of public shareholders, provides a windfall to its creditors and allows existing senior management to retain valuable equity interests in the reorganized company."

"Far from the bleak valuation picture presented by [Loral] and the official committee of unsecured creditors, the equity committee intends to demonstrate at the confirmation hearing that the true value of the debtors' businesses - based upon reasonable and realistic business assumptions - exceeds the total amount of valid claims against the debtors," the committee's objection said.

Two former employees, who were participants in the Loral Savings Plan, said the $100 million in federal Employee Retirement Income Security Act claims are misclassified under the plan.

According to the employees, the plan classifies the claims as securities litigation claims, which makes them subordinate to unsecured claims and provides no distribution.

The employees said the claims should be classified as general unsecured claims, giving claimants a share of the reorganized company's stock.

Finally, creditor Oracle USA, Inc. said the plan allows its contracts with Loral to be randomly assigned to "affiliates" of the existing or reorganized company.

Oracle said the affiliates are unknown and the plan does not assure it of the affiliates' future performance.

A plan confirmation hearing is scheduled for July 13.

Loral, a New York-based satellite company, filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.

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