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Indenture Trustee’s Position Upheld, Summary Judgment Granted

Carter Ledyard successfully represented U.S. Bank N.A. in its capacity as Indenture Trustee and Collateral Agent in a bankruptcy dispute before the Southern District of New York. The dispute involved whether liens on the economic value associated with Federal Communications Commission licenses attached at the time the bankrupt debtor, satellite operator TerreStar Networks Inc., entered into an agreement pursuant to which it issued $500 million in senior secured notes. Unsecured creditor Sprint Nextel Corp. had sought to void the liens that U.S. Bank and other creditors had placed on FCC licenses held by TerreStar. Sprint argued that the liens were invalid because there was no transfer of assets prior to the bankruptcy petition. The bankruptcy court rejected Sprint’s argument, reasoning “that an FCC license is a general intangible and that a lien on such an intangible may be perfected prepetition before any proceeds or other consideration is generated and prior to any transfers, sale, or other disposition of the license…”

Litigation partner Franklin Ciaccio, litigation counsel Gerald W. Griffin, and litigation associates Bryce C. Bernards and Michael H. Bauscher represented U.S. Bank.

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