TerreStar Networks Inc. wants to extend until mid-June from mid-February the time it has to control exclusively the filing of its bankruptcy-exit plan as it continues to explore a sale of its assets.
The wireless-network company also said in court papers Wednesday that it expects publicly traded parent TerreStar Corp. (TSTRQ), which wasn't included in TerreStar's bankruptcy filing, to soon file for Chapter 11 protection.
The moves are partially procedural, as TerreStar Networks--the main operating subsidiary of TerreStar Corp.--expects to solicit creditor approval on its already-filed plan shortly after the Feb. 16 hearing to consider the extension. Other affiliates of TerreStar Corp. included in the bankruptcy petition still haven't filed reorganization plans, so the extension would give the company time to work on those.
The company said in its filing that those non-TerreStar Networks debtors and the publicly traded parent are working on a "separate, consensual restructuring" with creditors.
For TerreStar Networks, the extension would give the company more time to explore a sale that could take the place of its bankruptcy plan and fetch more money for creditors.
"If competing plans are proposed at this early stage of the chapter 11 cases, or in the context of a potential sale of the [TerreStar Networks] assets, such plans would not only delay the [TerreStar Networks] emergence, but could also jeopardize any sale the [TerreStar Networks] debtors are pursuing at that time," TerreStar says in its filing.
Judge Sean H. Lane of U.S. Bankruptcy Court in Manhattan will consider the request at the Feb. 16 hearing. If approved, TerreStar and its affiliates would have exclusive control to file their own plans until June 16 and would have until Aug. 16 to solicit votes on those plans.
Reston, Va.-based TerreStar, which is trying to build the first satellite smartphone, filed for Chapter 11 protection in Manhattan in October with a plan calling for secured noteholders such as potential buyer EchoStar Corp. (SATS) to swap more than $850 million in debt for nearly all the equity in a reorganized TerreStar. More junior creditors, however, will get just pennies on the dollar, and existing equity holders are set to get nothing.
Last month, Judge Lane sent the exit plan to creditors for a vote after a multiday hearing with many objections by creditors and eventual concessions by TerreStar.
The company has said that, alongside its bankruptcy plan, it is also exploring a sale of the company that could fetch more value. Last month, The Wall Street Journal reported that MetroPCS Communications Inc. (PCS) was one of the parties interested in those assets.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
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