Threats of legal action against DISH Network appear to be growing.
In a letter sent to the company’s board, DISH creditors allege that the satellite TV provider’s restructuring plan is illegal, and if the deal isn’t reversed, the group will take legal action, people close to the matter told Bloomberg.
In the letter, the creditors — working with law firm Milbank — said that DISH’s plan to swap out almost $10 billion in debt for new secured notes is a violation of its debtholder agreements.
Milbank reportedly holds more than $10 billion — about half — of DISH’s debts as well as a majority of the company’s 11.75% notes due in 2027.
This comes after news broke earlier this month that DISH creditors were considering defaulting after the company reportedly “moved prized assets out of bondholders’ reach,” which the letter also mentions. Among a reported series of transactions, DISH transferred certain of its wireless spectrum licenses under the umbrella of a newly formed branch of the company, EchoStar Wireless Holding. Creditors are investigating whether this was a breach of DISH’s debt contract.
Not long before the allegations began, DISH and EchoStar had just completed their merger to create EchoStar Corporation. The satellite TV provider brought with it a mountain of debt that it amassed while trying to build out its 5G network. The cash influx from EchoStar was meant to pay down
DISH will remain a cable TV brand, but it still intends to work towards becoming a competitive wireless provider. These recent potential legal obstacles may prove to be a setback from the company.
DISH and Milbank weren’t immediately available for comment.