Dish DBS Corp., the satellite pay TV provider owned by Charlie Ergen’s EchoStar, and its subsidiaries filed for prepackaged Chapter 11 bankruptcy Tuesday.
If approved by the United States Bankruptcy Court for the Southern District of Texas’ Houston Division, the move would implement the terms of a previously announced restructuring plan that would allow Dish to pay off debt early with no penalty.
The plan, which has support from holders of more than 88% of Dish DBS’ secured and unsecured notes and from holders of more than $8.8 billion in Dish Wireless debt, is intended to allow the company to focus on its ongoing operations while providing greater strategic flexibility for future initiatives.
EchoStar said that they anticipate “all classes of claims will vote to accept, or be deemed to have accepted, the Plan.” Dish expects to emerge from Chapter 11 bankruptcy before the end of the third quarter.
The move is not expected to affect Dish’s brands, customers, operations or employees, and the case does not include EchoStar Corp., Hughes Satellite Systems Corp., or the entities that operate the company’s Boost Mobile and Gen Mobile brands.
“EchoStar has been at the forefront of telecommunications for over 45 years, and these steps will position the business for an even stronger future,” Ergen said in a statement. “We are operating as usual throughout this process, delivering the same high-quality services that our customers expect. I want to thank our team members for their relentless focus and our customers and partners for their continued support.”
The restructuring plan positions Dish for long-term success and will “facilitate the completion of the orderly transition” of the Dish Wireless business that was initiated after the $23 billion sale of spectrum licenses to AT&T last year.
Under the terms of the prepackaged plan, Dish will pay in full and retire $2 billion in senior secured notes due July 1, which will be funded by $20.25 billion in net proceeds to be paid upon closing of its transaction with AT&T. A delay in the closing of the deal has left it without sufficient liquidity to meet the obligations, the company said.
All allowed claims against Dish Wireless will be liquidated and entitled to receive distributions from the proceeds of the sale of its assets. Holders of qualifying claims incurred with respect to the decommissioning of the Dish Wireless 5G network will also have the right to recover from a separate $2.4 billion fund ordered by the FCC. Any such claim in an amount less than $100,000 has been prioritized by the FCC and is secured by the fund.
White & Case LLP is serving as legal counsel to Dish and FTI Consulting, Inc. is serving as financial advisor.
