KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP … · 2 days ago · Relief Requested 1. By this Motion, the Debtors res pectfully seek entry of an order, substantially in

KE 69512907

Edward O. Sassower, P.C. (admitted pro hac vice) Michael A. Condyles (VA 27807) Steven N. Serajeddini, P.C. (admitted pro hac vice) Peter J. Barrett (VA 46179) Anthony R. Grossi (admitted pro hac vice) Jeremy S. Williams (VA 77469) KIRKLAND & ELLIS LLP Brian H. Richardson (VA 92477) KIRKLAND & ELLIS INTERNATIONAL LLP KUTAK ROCK LLP 601 Lexington Avenue 901 East Byrd Street, Suite 1000 New York, New York 10022 Richmond, Virginia 23219-4071 Telephone: (212) 446-4800 Telephone: (804) 644-1700 Facsimile: (212) 446-4900 Facsimile: (804) 783-6192 Co-Counsel to the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

) In re: ) Chapter 11 ) INTELSAT S.A., et al.,1 ) Case No. 20-32299 (KLP) ) Debtors. ) (Jointly Administered) )

DEBTORS’ MOTION FOR ENTRY

OF AN ORDER (I) AUTHORIZING THE DEBTORS TO ENTER INTO THE JULY

LETTER AGREEMENT BETWEEN THE DEBTORS AND SPEEDCAST COMMUNICATIONS INC. AND CERTAIN OF ITS AFFILIATES AND (II) GRANTING RELATED RELIEF

The above-captioned debtors and debtors in possession (collectively, the “Debtors”)

respectfully state as follows in support of this motion (the “Motion”):2

1 Due to the large number of Debtors in these chapter 11 cases, for which joint administration has been granted, a

complete list of the Debtor entities and the last four digits of their federal tax identification numbers is not provided herein. A complete list may be obtained on the website of the Debtors’ claims and noticing agent at https://cases.stretto.com/intelsat. The location of the Debtors’ service address is: 7900 Tysons One Place, McLean, VA 22102.

2 A detailed description of the Debtors and their business, and the facts and circumstances supporting the Debtors’ chapter 11 cases, are set forth in greater detail in the Declaration of David Tolley, Executive Vice President, Chief Financial Officer, and Co-Chief Restructuring Officer of Intelsat S.A., in Support of Debtors’ Chapter 11 Petitions and First Day Motions [Docket No. 6] (the “First Day Declaration”), filed contemporaneously with the Debtors’ voluntary petitions for relief filed under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) on May 13, 2020 (the “Petition Date”). Capitalized terms used but not otherwise defined in this Motion shall have the meanings ascribed to them in the First Day Declaration or as later defined herein, as applicable.

Case 20-32299-KLP Doc 461 Filed 07/03/20 Entered 07/03/20 17:41:01 Desc MainDocument Page 1 of 27

Relief Requested

1. By this Motion, the Debtors respectfully seek entry of an order, substantially in the

form attached as Exhibit A hereto (the “Order”): (a) authorizing the Debtors to enter into that

certain letter agreement attached to the Order as Exhibit 1 (the “July Letter Agreement”) and

(b) granting related relief. In support of this Motion, the Debtors submit the Declaration of David

Tolley in Support of the Debtors’ Motion for Entry of an Order (I) Authorizing the Debtors to

Enter into the July Letter Agreement Between the Debtors and Speedcast Communications Inc.

and Certain of Its Affiliates and (II) Granting Related Relief attached hereto as Exhibit B (the

“Tolley Declaration”).

Jurisdiction and Venue

2. The United States Bankruptcy Court for the Eastern District of Virginia

(the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the

Standing Order of Reference from the United States District Court for the Eastern District of

Virginia, dated August 15, 1984. The Debtors confirm their consent, pursuant to Rule 7008 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), to the entry of a final order by

the Court in connection with this Motion to the extent that it is later determined that the Court,

absent consent of the parties, cannot enter final orders or judgments in connection herewith

consistent with Article III of the United States Constitution.

3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

4. The bases for the relief requested herein are section 105(a) of the Bankruptcy Code,

Bankruptcy Rule 9019, and rule 9019-1 of the Local Rules of the United States Bankruptcy Court

for the Eastern District of Virginia (the “Local Bankruptcy Rules”).


Background

5. The Debtors (together with their non-Debtor affiliates, the “Company”) operate one

of the world’s largest satellite services businesses, providing a critical layer in the global

communications infrastructure. As the foundational architects of satellite technology, the

Company operates the largest satellite fleet and connectivity infrastructure in the world.

6. Through its global and extra-terrestrial network of satellites and teleports, the

Company provides diversified communications services to the world’s leading media companies,

fixed and wireless telecommunications operators, data networking service providers for enterprise

and mobile applications in the air and on the seas, multinational corporations and internet service

providers in the most challenging and remote locations across the globe. The Company is also the

leading provider of commercial satellite communication services to the U.S. government and other

select military organizations and their contractors. The Company’s administrative headquarters

are in McLean, Virginia, and the Company has extensive operations spanning across the United

States, Europe, South America, Africa, the Middle East, and Asia.

7. On the Petition Date, the Debtors filed voluntary petitions for relief under

chapter 11 of the Bankruptcy Code. The Debtors are operating their business and managing their

properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

On May 15, 2020, the Court entered an order granting procedural consolidation and joint

administration of these chapter 11 cases pursuant to Bankruptcy Rule 1015(b).

Preliminary Statement

I. Relationship with Speedcast

8. Speedcast Communications Inc. and certain of its affiliates (collectively,

“Speedcast,” and together with the Debtors, the “Parties”) is an international remote

communications and information technology services company, which provides information and


connectivity services to customers in remote locations across the globe, including cruise lines,

energy companies, and commercial maritime businesses.

9. The Debtors provide Speedcast with satellite bandwidth and related services that

provide or supplement network connectivity to Speedcast and its customers for a variety of

purposes, including data and voice applications and network systems integration services. Because

Speedcast primarily serves customers in the mobility markets and remote areas, with little or no

terrestrial connectivity, it is heavily reliant on satellite networks to be able to serve its customers.

10. The Debtors’ services are essential to the success of Speedcast’s business. The

Debtors operate one of the world’s largest satellite services businesses and are able to fulfill

Speedcast’s need for bandwidth in remote locations, particularly where there are few, if any, other

suppliers of satellite services. Accordingly, Speedcast likely would have to incur significant costs

to replace the Debtors as a supplier—to the extent that there are replacement options available—

resulting in significant interruption to Speedcast’s ability to serve its customers.

11. The Debtors and Speedcast were party to a number of agreements, including that

certain master service agreement (the “MSA”), dated December 23, 2003, and many related

service agreements (such agreements, together with the MSA, the “Prepetition Agreements”). In

2019, as Speedcast encountered financial difficulties, Speedcast began to fall behind on payments

that were due to the Debtors for services rendered under the Prepetition Agreements. On

August 30, 2019, the Debtors sent notice of nonpayment to Speedcast with respect to amounts that

were past due under the Prepetition Agreements. The Debtors also informed Speedcast that its

failure to cure the past due amounts may result in a suspension of services by the Debtors.

12. In an effort to reach a mutually beneficial resolution with respect to the amounts

due under the Prepetition Agreements, the Debtors and Speedcast entered into a repayment plan


(the “Repayment Plan”), which provided a repayment schedule by which Speedcast was to pay the

amounts owed to the Debtors and levied a 10% rate of interest on overdue receivables.

Unfortunately, Speedcast’s financial difficulties compounded and it was unable to comply with

the terms of the Repayment Plan. On March 5, 2020, the Debtors again sent notice of nonpayment

to Speedcast, and demanded that Speedcast cure the nonpayment within ten days, as was required

under the Repayment Plan. On March 20, 2020, the Debtors sent a notice to Speedcast that it was

terminating the master service agreement, the Repayment Plan, and all related service agreements.

13. Because the satellite services provided by the Debtors to Speedcast are critical to

the operation of Speedcast’s business, the Parties continued their efforts to find a viable plan for

Speedcast to meet its obligations to the Debtors and for the Debtors to continue their vital services

to Speedcast. Over the next few weeks, the Parties continued to negotiate a resolution for the

amounts owed and go-forward services. On April 21, 2020, the Parties entered into a letter

agreement (the “April Letter Agreement”), which provided for, among other things, the Debtors’

continued service to Speedcast through June 30, 2020 on the terms described therein and an

agreement that the Debtors would have a $44 million dollar unsecured claim in Speedcast’s

chapter 11 cases, which were commenced in the Bankruptcy Court for Southern District of Texas

two days later, on April 23, 2020. The April Letter Agreement contemplated that services after

June 30, 2020, if any, would be subject to new agreements between the Parties. The April Letter

Agreement also provided for a broad, mutual release of claims between the Parties, and was only

effective upon court approval in Speedcast’s chapter 11 cases.


14. Speedcast obtained approval of the April Letter Agreement in its chapter 11 cases

on April 24, 2020. The court in Speedcast’s chapter 11 cases referred to the Debtors as “one of

the most critical vendors that [he] could imagine” for Speedcast’s business.3

II. The July Letter Agreement

15. As contemplated by the April Letter Agreement, the Parties have been negotiating

the terms of their go-forward commercial relationship after June 30, 2020. These negotiations

resulted in the execution of the July Letter Agreement, which provides for the continuation of the

mutually beneficial commercial relationship between the Parties on reasonable and customary

terms.4

16. The Debtors will provide certain satellite bandwidth capacity, uplink and other

services (collectively, the “Services”) to Speedcast beginning on July 1, 2020 and continuing until

September 30, 2021, as set forth in the July Letter Agreement. The Services are to be provided on

ordinary course terms, including in a certain negotiated amount each month and upon the

negotiated payment terms set forth in the July Letter Agreement. The July Letter Agreement

contemplates that the Parties will agree to customary long-form agreements to supersede and

govern the Parties’ commercial relationship on a go-forward basis shortly following the Court’s

approval of the July Letter Agreement.

17. The Debtors will waive their general unsecured claim against Speedcast

(the “Claim Waiver”) in Speedcast’s bankruptcy cases, and the Parties will grant mutual releases

of claims, as set forth in the July Letter Agreement (the “Releases”).

3 See In re Speedcast International Limited, First Day Hr’g Tr. 89:22-24, April 24, 2019.

4 This summary of the Letter Agreement is being provided for convenience only. In the event of any conflict between anything contained in the Motion—including this summary—and the Letter Agreement, the Letter Agreement shall control.


18. Speedcast is seeking authority to enter into the July Letter Agreement in its chapter

11 cases. On July 1, 2020, Speedcast filed a motion in its chapter 11 cases seeking court authority

to enter into the July Letter Agreement. That motion is expected to be considered before the Court

considers this Motion.

Basis for Relief

I. The July Letter Agreement is in the Best Interests of the Debtors’ Estates.

19. Bankruptcy Rule 9019 provides, in relevant part:

On motion by the [debtor in possession] and after notice and a hearing, the court may approve a compromise or settlement. Notice shall be given to creditors, the United States trustee, the debtor, and indenture trustee as provided in Rule 2002 and to any other entity as the court may direct.

Fed. R. Bankr. P. 9019(a).

20. Compromises are tools for expediting the administration of the case and reducing

administrative costs, and are favored in bankruptcy. See In re Bond, 16 F.3d 408, 1994 WL 20107,

at *3 (4th Cir. 1994) (unpublished table decision) (“To minimize litigation and expedite the

administration of a bankruptcy estate, compromises are favored in bankruptcy.” (internal quotation

marks omitted)); see also In re Frye, 216 B.R. 166, 172 (Bankr. E.D. Va. 1997) (citing Richardson

v. Richardson, 10 Va. App. 391, 399 (1990)).

21. In order to approve the July Letter Agreement under Bankruptcy Rule 9019, the

Court must determine that the July Letter Agreement is in the “best interest of the estate” and is

“fair and equitable.” In re Frye, 216 B.R. at 174. Among the relevant factors considered by

bankruptcy courts in the Eastern District of Virginia are “the interests of creditors with proper

deference to their reasonable views” and “the complexity, time and expense of the litigation.” In

re Three Rivers Woods, Inc., No. 98-38685 (DOT), 2001 WL 720620, at *6 (Bankr. E.D. Va. 2001)

(quoting In re Austin, 186 B.R. 397, 400 (Bankr. E.D. Va. 1995)). In determining whether to


approve a proposed settlement, however, the bankruptcy court should not substitute its judgment

for that of the debtor. See In re Carla Leather, Inc., 44 B.R. 457, 465 (Bankr. S.D.N.Y. 1984).

Instead, rather than conduct “a mini-trial” of the lawsuit at issue, “[t]he Court’s fundamental

determination is . . . whether the settlement falls ‘below the lowest point in the range of

reasonableness.’” In re Three Rivers Woods, 2001 WL 720620, at *6 (quoting In re Austin, 186

B.R. at 400).

22. The Debtors believe that the July Letter Agreement represents a fair and reasonable

compromise of the Parties’ competing interests. Speedcast likely would not have agreed to enter

into the July Letter Agreement without the Debtors waiving their claims against it. The Debtors

believe it is in the best interest of their estates to forego the speculative and delayed recovery that

they might realize in Speedcast’s chapter 11 cases in order to gain certainty that Speedcast will

remain a customer on a go-forward basis. Additionally, because there were broad mutual releases

contained in the April Letter Agreement, the Releases would only apply to claims that have arisen

since the execution of the April Letter Agreement on April 21, 2020. For the avoidance of doubt,

neither Speedcast nor the Debtors are currently aware of any claim that has arisen since that time.

23. The Debtors believe that the July Letter Agreement is fair, equitable, in the best

interests of the Debtors’ estates, and easily falls within the range of reasonable outcomes. As set

forth above, the July Letter Agreement is the product of months of hard-fought, good-faith

negotiation among the Parties, embodying a resolution that is beneficial to both sides. For the

foregoing reasons, the Debtors respectfully submit that the July Letter Agreement satisfies the

standards for approval under applicable law and that the Court should therefore approve the July

Letter Agreement pursuant to Bankruptcy Rule 9019.


Waiver of Memorandum of Law

24. The Debtors respectfully request that this Court treat this Motion as a written

memorandum of points and authorities or waive any requirement that this Motion be accompanied

by a written memorandum of points and authorities as described in Local Bankruptcy Rule

9013-1(G).

Notice

25. The Debtors will provide notice of this Application via first class mail, facsimile or

email (where available) to: (a) the United States Trustee for the Eastern District of Virginia,

Attn: Kenneth N. Whitehurst III, B. Webb King, Shannon F. Pecoraro, and Kathryn R.

Montgomery; (b) the holders of the 40 largest unsecured claims against the Debtors (on a

consolidated basis); (c) the indenture trustee for the Intelsat S.A. Senior Convertible Notes and

counsel thereto; (d) the indenture trustee for the Intelsat Luxembourg 7.75% Senior Notes and

counsel thereto; (e) the indenture trustee for the Intelsat Luxembourg 8.125% Senior Notes and

counsel thereto; (f) the indenture trustee for the Intelsat Luxembourg 12.5% Senior Notes and

counsel thereto; (g) the indenture trustee for the Intelsat Connect Finance 9.5% Senior Notes and

counsel thereto; (h) the indenture trustee for the Intelsat Jackson 5.5% Senior Notes and counsel

thereto; (i) the indenture trustee for the Intelsat Jackson 9.75% Senior Notes and counsel thereto;

(j) the indenture trustee for the Intelsat Jackson 8.5% Senior Notes and counsel thereto; (k) Pryor

Cashman LLP as counsel to the indenture trustees for the Intelsat Jackson 9.5% First Lien Notes

and the Intelsat Jackson 8.0% First Lien Notes; (l) Cahill Gordon & Reindel LLP as counsel to the

administrative agent under the Intelsat Jackson credit agreement; Winston & Strawn LLP as

counsel to the collateral trustee under the Intelsat Jackson credit agreement; (m) Akin Gump

Strauss Hauer & Feld LLP as counsel to an ad hoc group of certain prepetition secured parties;

(n) Jones Day as counsel to a crossover ad hoc group of term loan lenders and


noteholders; (o) Paul, Weiss, Rifkind, Wharton & Garrison LLP and Whiteford, Taylor & Preston,

L.L.P. as counsel to an ad hoc group of noteholders; (p) Davis Polk as counsel to the agent under

the DIP Credit Agreement; (q) Orrick, Herrington & Sutcliffe LLP as counsel to an ad hoc group

of noteholders; (r) Milbank LLP as counsel to the official committee of unsecured creditors (the

“Committee”); (s) the United States Attorney’s Office for the Eastern District of Virginia; (t) the

National Association of Attorneys General; (u) the Internal Revenue Service; (v) the offices of the

attorneys general for the states in which the Debtors operate; (w) the Securities and Exchange

Commission; (x) the Federal Communications Commission; and (y) any party that has requested

notice pursuant to Bankruptcy Rule 2002 (collectively, the “Notice Parties”). The Debtors submit

that, in light of the nature of the relief requested, no other or further notice need be given.

No Prior Request

26. No prior request for the relief sought in this Motion has been made to this or any

other court.

[Remainder of page intentionally left blank]


WHEREFORE, the Debtors respectfully request that the Court enter the order,

substantially in the form attached hereto as Exhibit A, granting the relief requested herein and

such other relief as the Court deems appropriate under the circumstances.

Richmond, Virginia Dated: July 3, 2020 /s/ Jeremy Williams KUTAK ROCK LLP KIRKLAND & ELLIS LLP Michael A. Condyles (VA 27807) KIRKLAND & ELLIS INTERNATIONAL LLP Peter J. Barrett (VA 46179) Edward O. Sassower, P.C. (admitted pro hac vice) Jeremy S. Williams (VA 77469) Steven N. Serajeddini, P.C. (admitted pro hac vice) Brian H. Richardson (VA 92477) Anthony R. Grossi (admitted pro hac vice) 901 East Byrd Street, Suite 1000 601 Lexington Avenue Richmond, Virginia 23219-4071 New York, New York 10022 Telephone: (804) 644-1700 Telephone: (212) 446-4800 Facsimile: (804) 783-6192 Facsimile: (212) 446-4900 Email: [email protected] Email: [email protected] [email protected] [email protected] [email protected] [email protected]

[email protected] Co-Counsel to the Debtors Co-Counsel to the Debtors and Debtors in Possession and Debtors in Possession


Exhibit A

Proposed Order


1



RICHMOND DIVISION


ORDER (I) AUTHORIZING THE

DEBTORS TO ENTER INTO THE JULY LETTER AGREEMENT BETWEEN THE DEBTORS

AND SPEEDCAST COMMUNICATIONS INC. AND CERTAIN OF ITS AFFILIATES AND (II) GRANTING RELATED RELIEF

Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of an order (this “Order”), (a) authorizing the Debtors to

enter into the July Letter Agreement and (b) granting related relief, all as more fully set forth in

the Motion; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334 and the Standing Order of Reference from the United States District Court for the Eastern



2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Motion.


2

District of Virginia, dated August 15, 1984, and this Court having found that it may enter a final

order consistent with Article III of the United States Constitution; and this Court having found that

venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408

and 1409; and this Court having found that the relief requested in the Motion is in the best interests

of the Debtors’ estates, their creditors, and other parties in interest; and this Court having found

that the Debtors’ notice of the Motion and opportunity for a hearing on the Motion were

appropriate under the circumstances and that no other notice need be provided; and this Court

having reviewed the Motion and the Tolley Declaration and having heard the statements in support

of the relief requested therein at a hearing before this Court (the “Hearing”); and this Court having

determined that the legal and factual bases set forth in the Motion and at the Hearing establish just

cause for the relief granted herein; and upon all of the proceedings had before this Court; and after

due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:

1. The Motion is granted as set forth herein.

2. The July Letter Agreement attached hereto as Exhibit 1 is approved in accordance

with Bankruptcy Rule 9019, in all respects, including, without limitation, the Claim Waiver and

Releases set forth therein.

3. The Debtors and Speedcast are hereby authorized to enter into, perform under,

execute, and deliver the July Letter Agreement.

4. The Debtors are authorized to take all actions necessary or desirable to effectuate

the relief granted in this Order in accordance with the Motion.

5. The requirement under Local Bankruptcy Rule 9013-1(G) to file a memorandum

of law in connection with the Motion is waived.


3

6. Notice of the Motion as provided therein shall be deemed good and sufficient notice

of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Local Bankruptcy Rules

are satisfied by such notice.

7. This Court retains exclusive jurisdiction with respect to all matters arising from or

related to the implementation, interpretation, and enforcement of this Order.

Dated: ____________ Richmond, Virginia United States Bankruptcy Judge


WE ASK FOR THIS: /s/ Jeremy Williams Michael A. Condyles (VA 27807) Peter J. Barrett (VA 46179) Jeremy S. Williams (VA 77469) Brian H. Richardson (VA 92477) KUTAK ROCK LLP 901 East Byrd Street, Suite 1000 Richmond, Virginia 23219-4071 Telephone: (804) 644-1700 Facsimile: (804) 783-6192 - and - Edward O. Sassower, P.C. (admitted pro hac vice) Steven N. Serajeddini, P.C. (admitted pro hac vice) Anthony R. Grossi (admitted pro hac vice) KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Co-Counsel to the Debtors and Debtors in Possession

CERTIFICATION OF ENDORSEMENT UNDER LOCAL BANKRUPTCY RULE 9022-1(C)

Pursuant to Local Bankruptcy Rule 9022-1(C), I hereby certify that the foregoing proposed order has been endorsed by or served upon all necessary parties.

/s/ Jeremy Williams


Exhibit 1

The July Letter Agreement


[Sealed]


Exhibit B

Tolley Declaration




RICHMOND DIVISION


DECLARATION OF DAVID TOLLEY

IN SUPPORT OF THE DEBTORS’ MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTORS

TO ENTER INTO THE JULY LETTER AGREEMENT BETWEEN THE DEBTORS AND SPEEDCAST COMMUNICATIONS INC. AND

CERTAIN OF ITS AFFILIATES AND (II) GRANTING RELATED RELIEF

I, David Tolley, hereby declare under penalty of perjury:

1. I am Executive Vice President, Chief Financial Officer, and Co-Chief Restructuring

Officer of Intelsat S.A., one of the world’s largest satellite operators and a diversified

communications services firm, and one of the above-captioned debtors and debtors in possession

(together, the “Debtors,” and together with their non-Debtor affiliates, the “Company”). I am a




2

member of Intelsat S.A.’s Management Committee, and lead the Company’s global finance

organization, which includes its accounting and reporting, finance, capital markets, treasury,

financial planning and analysis, tax, supply chain management, investor relations, and corporate

development functions.

2. I submit this declaration (this “Declaration”) in support of the Debtors’ Motion for

Entry of an Order (I) Authorizing the Debtors to Enter Into the July Letter Agreement Between the

Debtors and Speedcast Communications Inc. and Certain of Its Affiliates and (II) Granting Related

Relief (the “Motion”).2

3. The statements in this Declaration are, except where specifically noted, based on

my personal knowledge or opinion, on information that I have received from the Debtors’

employees working directly with me or under my supervision, direction, or control, or from the

Debtors’ records maintained in the ordinary course of business. I am not being compensated

specifically for this testimony other than through payments received from the Debtors in the

ordinary course of my employment. If I were called upon to testify, I could and would testify

competently to the facts set forth herein. I am authorized to submit this Declaration on behalf of

the Debtors.

Qualifications

4. I joined the Company on June 3, 2019. Previously, I was Chief Financial Officer

of OneWeb Global Limited where I led the global finance organization and served on the

company’s Executive Committee. Prior to that, I was with The Blackstone Group for 11 years,

and as a Senior Managing Director in the Private Equity Group, I led the satellite services and

broadcasting investment effort. At Blackstone, I managed several investments, including the

2 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Motion.


3

$908 million purchase and subsequent sale of New Skies Satellites. I also spent five years as a

Vice President in the Investment Banking Division of Morgan Stanley, where I was a member of

the Communications Group formed to serve the market opportunity created by the

Telecommunications Act of 1996. I received my undergraduate degree, in history and economics,

from the University of Michigan, and earned an MBA in finance from Columbia University.

5. I am generally familiar with the relationship between Speedcast Communications

Inc. and certain of its affiliates (collectively, “Speedcast,” and together with the Debtors, the

“Parties”) and the Debtors. I have taken part in numerous discussions with other employees of the

Debtors, and the Debtors’ advisors, as well as Speedcast’s management and advisors regarding the

future of the Parties’ commercial relationship. I have a general understanding of the nature and

amount of the debt owed by Speedcast to the Debtors and the terms of the April Letter Agreement,

including the payment terms, the allowance of the Debtors’ general unsecured claim, and the

mutual releases. I am also familiar with the terms of the July Letter Agreement attached to to the

Debtors’ proposed order (the “Order”) as Exhibit 1, including the monthly payments from

Speedcast to the Debtors, continued provision of satellite bandwidth and related services from the

Debtors to Speedcast, and the Claim Waiver and Releases.

6. I believe that the July Letter Agreement represents a fair compromise of the Parties’

competing interests. The July Letter Agreement paves the way for a long-term beneficial

commercial relationship between the Parties, and therefore I believe that entering into the July

Letter Agreement is in the best interest of the Debtors and their estates.

Relationship with Speedcast

7. The Debtors provide Speedcast with satellite bandwidth and related services that

provide or supplement network connectivity to Speedcast and its customers for a variety of

purposes, including data and voice applications and network systems integration services. Because


4

Speedcast primarily serves customers in the mobility markets and remote areas, with little or no

terrestrial connectivity, it is heavily reliant on satellite networks to be able to serve its customers.

8. The Debtors’ services are essential to the success of Speedcast’s business. The

Debtors operate one of the world’s largest satellite services businesses and are able to fulfill

Speedcast’s need for bandwidth in remote locations, particularly where there are few, if any, other

suppliers of satellite services. Accordingly, Speedcast likely would have to incur significant costs

to replace the Debtors as a supplier—to the extent that there are replacement options available—

resulting in significant interruption to Speedcast’s ability to serve its customers.

9. The Debtors and Speedcast were party to a number of agreements, including that

certain master service agreement (the “MSA”), dated December 23, 2003, and many related

service agreements (such agreements, together with the MSA, the “Prepetition Agreements”). In

2019, as Speedcast encountered financial difficulties, Speedcast began to fall behind on payments

that were due to the Debtors for services rendered under the Prepetition Agreements. On

August 30, 2019, the Debtors sent notice of nonpayment to Speedcast with respect to amounts that

were past due under the Prepetition Agreements. The Debtors also informed Speedcast that its

failure to cure the past due amounts may result in a suspension of services by the Debtors.

10. In an effort to reach a mutually beneficial resolution with respect to the amounts

due under the Prepetition Agreements, the Debtors and Speedcast entered into a repayment plan

(the “Repayment Plan”), which provided a repayment schedule by which Speedcast was to pay the

amounts owed to the Debtors and levied a 10% rate of interest on overdue receivables.

Unfortunately, Speedcast’s financial difficulties compounded and it was unable to comply with

the terms of the Repayment Plan. On March 5, 2020, the Debtors again sent notice of nonpayment

to Speedcast, and demanded that Speedcast cure the nonpayment within ten days, as was required


5

under the Repayment Plan. On March 20, 2020, the Debtors sent a notice to Speedcast that it was

terminating the master service agreement, the Repayment Plan, and all related service agreements.

11. Because the satellite services provided by the Debtors to Speedcast are critical to

the operation of Speedcast’s business, the Parties continued their efforts to find a viable plan for

Speedcast to meet its obligations to the Debtors and for the Debtors to continue their vital services

to Speedcast. Over the next few weeks, the Parties continued to negotiate a resolution for the

amounts owed and go-forward services. On April 21, 2020, the Parties entered into the April

Letter Agreement, which provided for, among other things, the Debtors’ continued service to

Speedcast through June 30, 2020 on the terms described therein and an agreement that the Debtors

would have a $44 million dollar unsecured claim in Speedcast’s chapter 11 cases, which were

commenced in the Bankruptcy Court for Southern District of Texas two days later, on April 23,

2020. The April Letter Agreement contemplated that services after June 30, 2020, if any, would

be subject to new commercial agreements between the Parties. The April Letter Agreement also

provided for a broad, mutual release of claims between the Parties, and was only effective upon

court approval in Speedcast’s chapter 11 cases.

12. Speedcast obtained approval of the April Letter Agreement in its chapter 11 cases

on April 24, 2020.

The July Letter Agreement

13. As contemplated by the April Letter Agreement, the Parties have been negotiating

the terms of their go-forward commercial relationship after June 30, 2020. These negotiations

resulted in the execution of the July Letter Agreement, which provides for the continuation of the


6

mutually beneficial commercial relationship between the Parties on reasonable and customary

terms.3

14. The Debtors will provide certain satellite bandwidth and other services

(collectively, the “Services”) to Speedcast beginning on July 1, 2020 and continuing until

September 30, 2021, as set forth in the July Letter Agreement. The Services are to be provided on

ordinary course terms, including in a certain negotiated amount each month and upon the

negotiated payment terms set forth in the July Letter Agreement. The July Letter Agreement

contemplates that the Parties will agree to customary long-form agreements to supersede and

govern the Parties’ commercial relationship on a go-forward basis shortly following the Court’s

approval of the July Letter Agreement.

15. The Debtors will waive their general unsecured claim against Speedcast

(the “Claim Waiver”) in Speedcast’s bankruptcy cases, and the Parties will grant mutual releases

of claims, as set forth in the July Letter Agreement (the “Releases”).

16. Speedcast is seeking authority to enter into the July Letter Agreement in its chapter

11 cases. On July 1, 2020, Speedcast filed a motion in its chapter 11 cases seeking court authority

to enter into the July Letter Agreement. I expect that this motion will be considered before the

Court considers this Motion.

17. The Debtors believe that the July Letter Agreement represents a fair and reasonable

compromise of the Parties’ competing interests and that Speedcast likely would not have agreed

to enter into the July Letter Agreement without the Debtors waiving their claims against it. The

Debtors believe it is in the best interest of their estates to forego the speculative and delayed

3 This summary of the July Letter Agreement is being provided for convenience only. In the event of any conflict

between anything contained in the Motion—including this summary—and the July Letter Agreement, the July Letter Agreement shall control.


7

recovery that they might realize in Speedcast’s chapter 11 cases in order to gain certainty that

Speedcast will remain a customer on a go-forward basis and on the mutually beneficial terms in

the July Letter Agreement. Additionally, because there were broad mutual releases contained in

the April Letter Agreement, the Releases would only apply to claims that have arisen since the

execution of the April Letter Agreement on April 21, 2020. For the avoidance of doubt, neither

Speedcast nor the Debtors are currently aware of any claim that has arisen since that time.

18. For the reasons set forth above, I believe that entry into the July Letter Agreement

is in the best interests of the Debtors’ estates, their creditors, and other parties in interest.

[Remainder of page intentionally left blank]


Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true

and correct to the best of my knowledge, information, and belief.

Dated: July 3, 2020 /s/ David Tolley McLean, Virginia Name: David Tolley Title: Vice President, Chief Financial Officer

and Co-Chief Restructuring Officer Intelsat S.A.


Documents

KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP … · 2 days ago · Relief Requested 1. By this Motion, the Debtors res pectfully seek entry of an order, substantially in