"By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
NEW YORK -(Dow Jones)- A judge on Wednesday granted final approval for the public parent company of TerreStar Networks Inc. to continue tapping a $13.4 million bankruptcy loan from creditor Solus Alternative Asset Management, about a month after the entity filed for bankruptcy protection in New York.
Judge Sean H. Lane of U.S. Bankruptcy Court in Manhattan approved the loan for the parent, TerreStar Corp. (TSTRQ), which will use the proceeds to pay operating costs, professional fees and satisfy pre-bankruptcy claims.
Also at Wednesday's hearing, Lane approved TerreStar Networks Inc.'s deal with creditors to extend by 75 days the amount of time it can control its own bankruptcy case. Without the agreement, TerreStar Networks' exclusivity would have ended Wednesday.
"We are pursuing at least three alternatives," said TerreStar lawyer Arik Preis, of Akin Gump Strauss Hauer & Feld. Preis said that along with exploring a sale of the company, TerreStar is considering filing a plan of reorganization and also has begun exploring a third option.
That one is related to hedge fund manager Phil Falcone's Harbinger Capital Partners and Solus' joint bid last week for another satellite company in U.S. Bankruptcy Court, DBSD North America Inc.
As part of its bid for DBSD, the Harbinger/Solus group said in a letter that a tieup between DBSD and TerreStar Networks is a possibility.
"We have actively pursued and followed up with counsel to Solus," Preis said Wednesday.
TerreStar Networks last month scrapped a plan to reorganize into the hands of EchoStar Corp. (SATS), which is controlled by satellite-television mogul Charles Ergen.
Ergen is seeking to use his other publicly traded company, Dish Network Corp. (DISH) to buy DBSD.
In light of the Harbinger/Solus offer for DBSD, Judge Robert E. Gerber of U.S. Bankruptcy Court in Manhattan last week held off ruling on the Dish/DBSD offer until March 15, so creditors and the companies could discuss the merits of both deals.
Reston, Va.-based TerreStar Networks, 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 EchoStar to swap more than $850 million in debt for nearly all the equity in a reorganized TerreStar. More junior creditors, however, would have received just pennies on the dollar, and existing equity holders would have gotten nothing.
Even with that deal canceled, the debtor-in-possession financing for TerreStar Networks will remain in place, although the company will no longer be required to meet certain "milestones" depicted in that financing agreement.
The public parent TerreStar Corp. and other affiliates filed for Chapter 11 in February, and are working on plans of reorganization separate from TerreStar Networks.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com"
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