TerreStar receives approval for proposed settlement with creditors

By Sahara Marte

New York, Aug. 24 - TerreStar Corp. received court approval for its settlement proposal during a hearing on Thursday in the United States Bankruptcy Court for the Southern District of New York.

Judge Sean Lane approved TerreStar's compromise with Elektrobit Inc., a subsidiary of Elektrobit Corp., debtors, preferred shareholders and bridge lenders, dismissing two objections.

TerreStar was accused of creating an artificially impaired class and not providing a full-value secured note. Neither of the objections sustained.

Under the settlement, TerreStar will give Elektrobit will receive a secured note of $0.49 for each dollar of claim. Lane agreed it was an appropriate amount according to economic investigations.

Besides the objections, the judge voiced concerns about the settlement.

"I'm not a fan of paying outside of the settlement," added Lane. "It has the potential to have a case end up in knots."

All other unsecured creditors will be paid in cash.

TerreStar Corp. and TerreStar Holdings are subsidiaries of TerreStar Networks Inc., a Reston, Va.-based holding company with subsidiaries that operate satellite-based digital mobile communications systems. TerreStar Corp. And TerreStar Holdings filed for bankruptcy on Feb. 16, 2011. Their Chapter 11 case number is 11-10612.

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