TerreStar Networks Inc.

ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C‑36, AS AMENDED

APPLICATION OF TERRESTAR NETWORKS INC.
UNDER SECTION 46 AND FOLLOWING OF
THE COMPANIES’ CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C‑36, AS AMENDED

Updated  January 6, 2012

On October 19, 2010, TerreStar Networks Inc. (“TSNI”), TerreStar National Services Inc., TerreStar License Inc., TerreStar New York Inc., 0887729 B.C. Ltd., TerreStar Networks Holdings (Canada) Inc., and TerreStar Networks (Canada) Inc. (collectively, the “Debtors”), each filed voluntary petitions under chapter 11 of title 11 of the United States Code (the “U.S. Bankruptcy Proceeding”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). 

On October 19, 2010, pending approval of TSNI as the Foreign Representative (as defined below) by the Bankruptcy Court, the Ontario Superior Court of Justice (Commercial List) (the “Court”) entered an order (the “Interim Initial Order”) granting certain interim relief, including, among other things, a general stay of proceedings against the Debtors.  On October 20, 2010, the Bankruptcy Court entered an order appointing TSNI as the foreign representative of the Debtors (the “Foreign Representative”).  Further, pursuant to an order of the U.S. Bankruptcy Court, dated October 20, 2010, The Garden City Group, Inc. has been appointed as the claims and noticing agent in the Chapter 11 Cases, and materials relating to the Chapter 11 Cases can be found on the claim and notice agent’s web site: http://www.terrestarinfo.com/index.php

On October 21, 2010, the Court entered an “Initial Order” and a “Supplemental Order” under Part IV of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”), in respect of the U.S. Bankruptcy Proceeding and certain orders entered therein.  Pursuant to the Supplemental Order, among other things, Deloitte & Touche Inc. (“Deloitte”) was appointed as information officer (in such capacity, the “Information Officer”), as an officer of the Court.


Both prior to and during the U.S. Bankruptcy Proceeding, the Debtors explored potential restructuring alternatives and transactions.  In this regard, the Debtors filed a chapter 11 Plan in early November 2010, while at the same time continuing to seek strategic alternative sale transactions.  The Plan was subsequently withdrawn in February 2011. 

On April 15, 2011, the Debtors filed a motion requesting two (2) orders from the Bankruptcy Court:  (i) a bid procedures order (the “Bid Procedures Order”) approving, among other things, certain bid and auction procedures for the sale of all or substantially all of the Debtors’ assets; and (ii) upon acceptance by the Debtors of a qualifying bid, a sale order (the “Sale Order”) approving the sale to the winning bidder.  On May 4, 2011, the Bankruptcy Court approved the Bid Procedures Order, which was recognized by this Court on May 6, 2011.

On June 14, 2011, the Debtors entered into a purchase agreement (the “Stalking Horse Agreement”) with Gamma Acquisition L.L.C. (the “Purchaser” or the “Stalking Horse Bidder”), and (solely with regard to Section 6.19 of the Stalking Horse Agreement) DISH Network Corporation, which agreement provides for a purchase price of USD $1.375 billion in cash and the assumption of certain liabilities by the Purchaser in exchange for the Purchaser acquiring substantially all of the Debtors’ assets in the U.S. and Canada (the “Sale”).  On June 22, 2011, the Bankruptcy Court entered an order authorizing the Debtors to enter into the Stalking Horse Agreement and approving certain bid procedures and bid protections amendments in connection therewith (together, the “Purchaser Protections Order”), which was recognized by this Court on June 23, 2011.

The Debtors did not receive any additional bids before the Bid Deadline and on June 28, 2011, issued their Notice of Cancellation of Auction and Announcement Regarding Stalking Horse Bidder as the Winning Bidder, cancelling the Auction and declaring the Purchaser as the successful bidder.  To this end, the Debtors requested at the Sale Hearing that the Sale to the Purchaser be approved pursuant to the terms of the Stalking Horse Agreement and the Sale Order. 

On July 7, 2011, the Bankruptcy Court approved the Sale Order, approving the Stalking Horse Agreement, authorizing the sale of assets of the Debtor outside the ordinary course of business, free and clear of all liens, claims, interested and encumbrances, and authorized the assumption and sales and assignment of certain executory contracts and unexpired leases. 

On August 3, 2011, the Bankruptcy Court entered an order (the “First Secured Debt Repayment Order”), which approved the repayment of approximately USD $975 million of the Debtors’ secured debt obligations from the sale proceeds   to be received from the Purchaser .  A corresponding order of this Court recognizing the First Secured Debt Repayment Order was granted on August 4, 2011.

On or about August 11, 2011, the Debtors received USD $1.345 billion in proceeds (the “Funding Date Payment”) from the purchaser, and the Debtors immediately repaid approximately USD $975 million of the Debtors’ secured debt obligations, pursuant to the First Secured Debt Repayment Order, comprised of: i) approximately USD $85 million repaying in full obligations under the Debtors’ debtor-in-possession financing facility; ii) approximately USD $90 million, repaying a significant portion of obligations under TSNI’s purchase money credit agreement (the “PMCA”); and iii)approximately USD $800 million 

On September 21, 2011, the Debtors filed with the Bankruptcy Court a motion (the “PMCA Settlement Motion”) for entry of a stipulation and agreed order (the “PMCA Stipulation”) authorizing the Debtors to enter into, and approving, the settlement (the “PMCA Settlement”) between the statutory committee of unsecured creditors in the U.S. Bankruptcy Proceeding (the “Creditors’ Committee”), Harbinger Group, the PMCA Lenders, and U.S. Bank National Association, as collateral agent under the Debtors’ Purchase Money Credit Agreement resolving and settling certain pending litigation matters and certain other litigable issues in the U.S. Bankruptcy Proceeding related to the PMCA (the “PMCA Claim”). 

On October 4, 2011, the Bankruptcy Court entered an order (the “Second Secured Debt Repayment Order”), which authorized the Debtors to use a portion of the Funding Date Payment to repay USD $143,959,275 of the remaining amount outstanding under the 15% Notes (the “Second Secured Debt Repayment”).  A corresponding order of this Court recognizing the Second Secured Debt Repayment Order was granted on October 7, 2011.  Pursuant to the PMCA Settlement, the PMCA Lenders are entitled to an allowed secured claim in the amount of USD $97,977,488.33 plus an additional per diem amount for every day after September 15, 2011 until the repayment thereof.  Furthermore, the PMCA Settlement resolved the litigation initiated by the Creditor's Committee which sought to recharacterize as equity or equitably subordinate USD $5 million of the advance under the PMCA made by the PMCA Lenders to TSNI in August 2010 (the “PMCA Litigation”) without prejudice to any of the parties thereto, pending a determination by the Bankruptcy Court with respect to the PMCA Settlement, and upon approval, the PMCA Litigation was withdrawn in its entirety with prejudice.  As previously noted, the PMCA Lenders had already received USD $91,392,000 as per the First Secured Debt Repayment Order dated August 3, 2011.

An order approving the PMCA Settlement Motion was entered by the Bankruptcy Court on October 12, 2011 (the “PMCA Settlement Order”) and USD $8.3 million was paid on October 13, 2011 in accordance with the PMCA Settlement Order. Deloitte understands that the Foreign Representative did not seek recognition of the PMCA Settlement Order in Canada as the Canadian Debtors are not party to the PMCA Settlement or the PMCA.

On November 14, 2011, the Debtors filed a motion (the "Global Settlement Motion") in the Bankruptcy Court seeking entry of an order (the “Global Settlement Order”), which authorizes the Debtors to enter into, and approves, the settlement (the “Settlement”) reached with the (a) Creditors' Committee, (b) EchoStar Corporation, in its capacity as the largest holder of the 15% Notes and as a holder of the Debtors' 6.5% Senior Exchangeable PIK Notes due 2014 (“EchoStar”), (c) the ad hoc group of certain holders of the 15% Notes (the “Ad Hoc Group”), (d) Harbinger Capital Partners Master Fund I, Ltd. and Credit Distressed Blue Line Master Fund, Ltd. (collectively, “Harbinger”), (e) LightSquared Inc. and LightSquared LP (collectively, “LightSquared”), (f) Sprint Nextel Corporation (“Sprint”), (g) Solus Alternative Asset Management LP (“Solus"), and (h) U.S. Bank National Association, as indenture trustee and collateral agent for the 15% Notes (the “15% Notes Trustee” and, collectively with the Debtors, the Creditors' Committee, EchoStar, the Ad Hoc Group, LightSquared, Harbinger, Sprint and Solus, the “Settlement Parties”).

On November 18, 2011, the Debtors filed the Joint Chapter 11 Plan of TSNI, et al. (as may be amended, modified or supplemented from time to time, the “Plan”), together with a related disclosure statement (the “Disclosure Statement”).  Further, on November 18, 2011, the Debtors filed a motion (the "Disclosure Statement Motion") in the Bankruptcy Court seeking entry of an order (the “Disclosure Statement Order”), approving (a) the Disclosure Statement, and (b) certain procedures that will govern the solicitation and tabulation of votes to accept or reject the Plan (the “Solicitation and Voting Procedures”).  Amended versions of the Plan and Disclosure Statement were filed with the Bankruptcy Court on December 6, 2011.

On November 28, 2011, the Debtors published a legal notice in the Globe and Mail (national edition) providing notice that the Debtors filed the Plan and Disclosure Statement in the Bankruptcy Court on November 18, 2011 and that a hearing to consider the Disclosure Statement has been scheduled before the Bankruptcy Court on December 21, 2011.

On December 15, 2011, the Bankruptcy Court entered the Global Settlement Order authorizing the Settlement reached between the Settlement Parties.  A corresponding order of this Court recognizing the Global Settlement Order was granted on December 19, 2011. 

On December 21, 2011, the Bankruptcy Court entered the Disclosure Statement Order approving the amended versions of the Plan and Disclosure Statement and the Solicitation and Voting Procedures.  A corresponding order of this Court recognizing the Disclosure Statement Order was granted on December 22, 2011. 

On February 14, 2012, the Bankruptcy Court granted the Confirmation Order approving the Plan, as amended.  The Bankruptcy Court entered the Confirmation Order on February 15, 2012, a copy of which is included in the U.S. Court Orders section herein. A corresponding order of this Court recognizing the Confirmation Order was granted on February 16, 2012.

Pursuant to an Order granted by this Court on February 16, 2012, the discharge of Deloitte as Information Officer in respect of TerreStar Networks Inc., TerreStar National Services, Inc., TerreStar License Inc., 0887729 B.C. Ltd., TerreStar Network Holdings (Canada) Inc. and TerreStar Networks (Canada) Inc., was ordered to be effective on June 21, 2012, the date Deloitte filed the Certificate of Discharge with the Court. 

CANADIAN COURT ORDERS

Interim Initial Order (October 19, 2010)
Initial Recognition Order (October 21, 2010)
Supplemental Order (October 21, 2010)
Recognition Order (November 9, 2010)
Endorsement (November 9, 2010)
Recognition Order (November 19, 2010)
Endorsement (November 19, 2010)
Recognition Order (November 26, 2010)
Recognition Order (December 23, 2010)
Endorsement (December 23, 2010)
Recognition Order (March 4, 2011)
Endorsement (March 4, 2011)
Recognition Order (March 28, 2011)
Endorsement (March 28, 2011)
Recognition Order (May 6, 2011)
Endorsement (May 6, 2011)
Recognition Order (June 10, 2011)
Endorsement (June 10, 2011)
Recognition Order (June 23, 2011)
Endorsement (June 23, 2011)
Recognition Order (July 11, 2011)
Endorsement (August 4, 2011)
Recognition Order (August 4, 2011)
DIP Charge Discharge Order (September 13, 2011)
Endorsement (September 13, 2011)
Recognition Order (October 7, 2011) 
Recognition Order (December 19, 2011)
Endorsement (December 19, 2011)
Recognition Order – December 22, 2011
Endorsement – December 22, 2011
Endorsement - February 16, 2012
Recognition Order - February 17, 2012
Information Officer’s Certificate of Discharge

US COURT ORDERS

Court Order regarding Asset Sale
Court Order regarding 8th DIP Amendment
Court Order approving Stipulation – December 15, 2011
Court Order approving Disclosure Statement – December 21, 2011
Court Order approving Confirming the Joint Chapter 11 Plan – February 15, 2012

MOTION RECORDS

Application Record (October 21, 2010)
Affidavit of Alexandra North (October 21, 2010) (containing copies of U.S. Bankruptcy Court Orders subject to Supplemental Order)
Motion Record (November 9, 2010)
Motion Record (November 12, 2010)
Affidavit of Douglas Brandon (November 18, 2010)
Motion Record of the Applicant - Returnable November 26, 2010
Factum of the Applicant (December 23, 2010)
Motion Record - Returnable March 4, 2011
Notice of Motion - Returnable March 28, 2011
Motion Record - Part 1 (June 17, 2011)
Motion Record - Part 2 (June 17, 2011)
Affidavit of Jarvis Hetu (June 22, 2011)
Motion Record (July 11, 2011) and Affidavit of Douglas Brandon (June 24, 2011)
Supplemental Affidavit of Douglas Brandon (sworn July 8, 2011)
Motion Record - Returnable July 11, 2011
Motion Record – Returnable August 4 2011
Motion Record – Returnable October 7, 2011
Affidavit of Jarvis Hetu – October 5, 2011
Motion Record - December 12, 2011
Affidavit of Jarvis Hetu - December 15, 2011 
Motion Record [Part I of III] - December 16, 2011 
Motion Record [Part II of III] - December 16, 2011 
Motion Record [Part III of III] - December 16, 2011 
Motion Record [Part I of II] - February 10, 2012
Motion Record [Part II of II] - February 10, 2012
Affidavit of Jarvis Hetu - February 16, 2012
Affidavit of Jarvis Hetu - February 17, 2012

REPORTS OF THE INFORMATION OFFICER

Pre-Filing Report of the Proposed Information Officer (October 20, 2010)
First Report of the Information Officer (November 5, 2010)
Second Report of the Information Officer (November 18, 2010)
Third Report of the Information Officer (December 22, 2010)
Supplement to the Third Report of the Information Officer (December 23, 2010)
Fourth Report of the Information Officer (February 28, 2011)
Fifth Report of the Information Officer (March 18, 2011)
Sixth Report of the Information Officer (May 2, 2011
Supplement to the Sixth Report of the Information Officer (May 5, 2011)
Seventh Report of the Information Officer (June 22, 2011)
Eighth Report of the Information Officer (July 8, 2011)
Ninth Report of the Information Officer (July 29, 2011) 
Tenth Report of the Information Officer (October 6, 2011)
Eleventh Report of the Information Officer (December 15, 2011) 
Twelfth Report of the Information Officer (February 14, 2012)

OTHER INFORMATION

Notice of Initial Recognition Order
Service List
Notice of deadline for filing Proofs of Claim
Proof of Claim form
Notice of Cancellation of Auction and Announcement regarding Stalking Horse Bidder – June 28, 2011
Notice of Filing of Designated Contracts List and Proposed Cure Amounts – June 28, 2011

 

Please continue to visit this web site from time to time for updates on the Recognition Proceeding and the Chapter 11 Cases.

Additional information regarding the Recognition Proceeding or the Chapter 11 Debtors’ property or business in Canada may be obtained by calling or e-mailing:

Deloitte & Touche Inc.
Information Officer
Neil Jones 416-874-3142
Paul Casey 416-775-7172
E-mail: terrestar@deloitte.ca