Hughes Satellite Systems files Chapter 11 bankruptcy amid Starlink competition

Hughes Satellite Systems Corporation filed for Chapter 11 bankruptcy protection on Sunday, citing mounting competition from low-earth-orbit satellite providers and an inability to repay $1.5 billion in bonds that matured August 1.

The Germantown, Maryland-based company, a unit of Charlie Ergen's EchoStar Corp., filed voluntary petitions in the Bankruptcy Court for the Southern District of Texas, Houston Division. Hughes had $102 million in cash on hand as of the end of March, according to The Wall Street Journal, leaving it well short of the funds needed to cover the debt.

Hughes said it plans to use the bankruptcy process to reorganize around enterprise, government, and defense customers. To support that pivot, the company pointed in its filing to a contracted enterprise pipeline worth $1.5 billion and new awards it has secured with airline and U.S. defense customers. The company said it has sufficient cash to keep the business running through the restructuring period and has asked the court to allow it to honor obligations to workers and suppliers as proceedings continue.

EchoStar and Hughes's international subsidiaries are not part of the Chapter 11 proceedings. The filing has no impact on EchoStar's other brands, including DISH TV, Sling TV, and Boost Mobile, the company said. White & Case LLP is serving as legal counsel and FTI Consulting, Inc. as financial advisor to the filing entities.

Creditors representing roughly 80% of Hughes's senior bonds by face value formally put the company on notice in a July 21 letter, asserting fraudulent transfers and violations of fiduciary duty. Hughes pushed back through del Genio, who stated in his filing that the company rejects any suggestion that those claims have merit.