Dish DBS is asking a federal court Tuesday for permission to litigate its tower-lease claims before confirming its restructuring plan, a shift that could threaten to delay its exit from bankruptcy.
Dish, a subsidiary of Charlie Ergen's EchoStar broadcast empire, filed for bankruptcy in the U.S. Bankruptcy Court in Houston on June 30. The company was seeking a quick exit through a prepackaged agreement with broad support from its creditors after a $20.25 billion asset sale to AT&T was held up.
Multiple stakeholders accused Dish of a "bait-and-switch" in court papers ahead of a status conference in the Houston bankruptcy court. They stated that the company spent weeks negotiating the initial timeline, which was intended to resolve claims after the bankruptcy plan was confirmed.
At the heart of the dispute are roughly $7.6 billion in claims from cell-tower operators Crown Castle, American Tower and SBA Communications. Dish had leased the tower and ground space to build out its 5G network, but after the Federal Communications Commission forced it to sell part of its wireless spectrum portfolio, the company said it shouldn't have to pay lease claims.
Dish originally agreed to set aside the lease fights to expedite the confirmation of its bankruptcy plan. However, court documents filed by American Tower show that Dish has now asked the court to consolidate and resolve three separate lawsuits together on an expedited four-week schedule before approving its restructuring plan.
Even if Dish can't get the claims tossed altogether, it argues the bankruptcy code caps what a company owes landlords for terminated leases.
The tower companies disputed Dish's premise and criticized its schedule. They argue the disputes are too complex to resolve within a few weeks, requiring extensive discovery and raising distinct issues that must be litigated separately.
Dish said the change was caused by regulatory developments. The company argues a July 30 order from the FCC altered the financial calculus. The order clarified that a $2.4 billion trust, funded by proceeds from EchoStar's AT&T spectrum deal, can't be allocated to an $8.8 billion intercompany claim. According to Dish, this claim could otherwise repay creditors in full.
"The landscape of these cases fundamentally changed on July 30," Matthew Linder, a White & Case lawyer representing Dish, told the court. "This was not a strategic reversal."
Creditors pushed back, arguing the new plan relies on multiple hypotheticals. Kyle Kimpler, legal counsel for Crown Castle, said that Dish's plan relies on the assumption that it will win its lease objections. He added that creditors won't necessarily accept cash payments from the trust if doing so would require giving up legal claims against parent company EchoStar.
Dish is the latest bankruptcy to slog through its restructuring despite entering chapter 11 with a fully negotiated deal. TV retailer QVC Group, label maker Multi-Color and chemicals company Trinseo are among the recent restructurings that faced contentious disputes with various stakeholders in court.
Bankruptcy Judge Christopher Lopez is reviewing Dish's new request to push confirmation out to Nov. 12. The court is expected to decide Wednesday afternoon whether Dish can force a fast trial.