StarBand Files For Bankruptcy Court Protection

Communications Today, June 4, 2002

StarBand, a McLean, Va.-based high-speed, two-way satellite Internet provider, filed a petition for Chapter 11 reorganization with the U.S. Bankruptcy Court in Delaware.

As part of the reorganization, StarBand has a $2.8 million commitment for debtor-in-possession (DIP) financing from founding partner, Petah Tikva, Israelbased Gilat Satellite Networks Ltd. [GILTF]. Gilat, a worldwide provider of satellite networking technology, committed $2.8 million in debtor-in-possession (DIP) financing as part of the reorganization.

StarBand's voluntary Chapter 11 filing is intended to provide StarBand time to restructure its existing debt obligations as it seeks new equity investments to fund its operating and capital requirements, Gilat officials said. StarBand Monday afternoon received court approval of the DIP financing and intends to undertake a number of cost-saving programs during the reorganization. The approval gives StarBand immediate access to the DIP financing.

StarBand Chairman Zur Feldman said Monday that he was encouraged that StarBand's bank consortium agreed to support the bankruptcy filing that was made last Friday at 5 p.m.

A week before StarBand's bankruptcy reorganization filing, the company filed a lawsuit in the U.S. District Court in Alexandria, Virginia, charging that EchoStar Communications Corp. [DISH] has not forwarded millions of dollars in fees it has collected and is collecting as its billing agent. That lawsuit was withdrawn Friday, but industry sources said those issues could be consolidated in the Chapter 11 bankruptcy court filing.

For current StarBand customers, the bankruptcy should have no immediate effect on them, StarBand officials said.