Reuters
Loral shareholders press court to help with claims
Friday July 9, 3:31 pm ET
NEW YORK, July 9 (Reuters) - A shareholders group in bankrupt Loral Space & Communications (OTC BB:LRLSQ.OB - News) charged in court filings this week that the satellite company improperly undervalued itself in Chapter 11 to leave them with nothing for their holdings.
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The group, led by shareholders claiming to hold about 3.5 percent of Loral's stock, plans to argue in U.S. bankruptcy court on July 27 that it should be accorded "official" status, meaning it can hire legal and financial advisors at company expense to press their claims.
Shareholders in bankrupt companies are typically left with no value for their holdings after Chapter 11 reorganization proceedings, since liabilities often outweight assets and all value is distributed to creditors.
Loral, which filed for bankruptcy in July 2003, has stated in regulatory filings that its equity will likely have no value after its reorganization is submitted to the court in coming months.
However, the shareholders group disputes Loral's appraisals, setting the stage for a bankruptcy court valuation dispute.
Loral's public filings "contain numerous glaring omissions and exaggerations to minimize asset valuations and maximize liabilities," the so-called Loral Stockholders Protective Committee said in a statement this week.
A Loral spokeswoman declined to comment on the group's claims.
Chester Salomon, a bankruptcy lawyer with New York-based Salomon, Green & Ostrow, said if shareholders can produce evidence that Loral is improperly leaving out shareholders, its plea may gain traction before presiding U.S. Bankruptcy Judge Robert Drain.
However, the group faces a challenge, since the judge turned down a previous request to appoint a shareholders committee.
"If there are some bona fide arguments that the company has undervalued assets or overstated liabilities, Judge Drain may seriously consider appointing a committee or hiring an examiner," said Salomon, who isn't involved in the case.
Loral shares were delisted from the New York Stock Exchange following its bankruptcy filing last July. They were trading at 15 cents a share on Friday in over-the-counter trading, well down from around $3 a share a year ago prior to the filing.
The equity group, led by shareholders Tony Christ and Jeffrey Swarts, said in court papers that Loral's market value should be at least $19 a share.
The group said it hired an patent expert who claimed Loral's patents and trademarks alone are worth more than $500 million. The company, by contrast, said the value of such intellectual property is not known.
The group also claimed Loral undervalued its orbital satellite slots, proprietary satellite designs and other assets in an effort to leave out common stockholders. |
