- Dish DBS and Dish Wireless filed for Chapter 11 bankruptcy protection
- The filing is tied to a prepackaged restructuring plan
- Boost Mobile and Gen Mobile customers shouldn’t see an impact
Dish DBS Corp. and certain subsidiaries, including Dish Wireless, filed for Chapter 11 bankruptcy protection Tuesday.
The restructuring plan calls for implementing the terms of a previously announced Restructuring Support Agreement (RSA) signed in March. Holders of more than 88% of Dish DBS’s secured and unsecured notes, who also hold more than $8.7 billion of Dish Wireless debt, signed the RSA and agreed to support the restructuring plan.
The plan remains subject to U.S. bankruptcy court approval, but according to an EchoStar press release, it will position EchoStar and its subsidiaries for long-term success and facilitate the decommissioning of the Dish Wireless business after it initiated spectrum license sales in August and September of last year.
“EchoStar has been at the forefront of telecommunications for over 45 years, and these steps will position the business for an even stronger future,” said EchoStar co-founder and Chairman Charlie Ergen in a statement. “We are operating as usual throughout this process, delivering the same high-quality services that our customers expect.”
EchoStar agreed to sell certain spectrum licenses to AT&T and SpaceX for about $42 billion after a Federal Communications Commission (FCC) inquiry into its 5G network buildout. In May, the FCC approved the spectrum sales but required EchoStar to establish an escrow account of $2.4 billion to settle contracts with contractors that it quit paying.
The bankruptcy filing will permit Dish Wireless and its subsidiaries to dispose of their remaining assets “in an orderly and expeditious manner,” the company said. “The Chapter 11 process will provide a forum for the determination of all claims against Dish Wireless and the distribution of proceeds from the sale of its remaining assets.”
Tuesday’s filing will not affect the establishment of the fund that the FCC required as a condition of EchoStar’s spectrum sales to AT&T and SpaceX. The FCC structured the fund to prioritize claims of $100,000 or less and to encourage the resolution of outstanding claims against Dish Wireless.
EchoStar said it made the Chapter 11 filings Tuesday because the AT&T transaction hasn’t closed due to “unforeseen delays.” Due to those delays, Dish DBS doesn’t have sufficient liquidity to repay secured senior notes due July 1 while continuing its ordinary course of business.
The July 1 notes will be paid in full in cash as promptly as possible after closing the AT&T deal or “on the effective date of the plan.”
Basically, it’s a “business as usual” mode of operation for EchoStar’s existing wireless business. The company said customers, operations and employees of the Boost Mobile and Gen Mobile brands will not be affected.