Filing Alert: Hughes Chapter 11

Hughes Satellite Systems Corporation, an Englewood, CO-based satellite communications company known for its HughesNet satellite broadband internet service an...

Hughes Satellite Systems Corporation and its debtor affiliates⁽¹⁾, an Englewood, CO-based satellite communications company known for its HughesNet satellite broadband internet service and satellite ground systems technology, filed for Chapter 11 protection on Aug. 2 in the U.S. Bankruptcy Court for the Southern District of Texas.

The Debtors attribute the filing to two converging pressures: the consumer satellite broadband market's structural transition from geostationary ("GEO") to low-earth-orbit ("LEO") infrastructure, and the maturity of approximately $1.5 billion of senior notes the Debtors lack the cash to repay. LEO constellations deployed by SpaceX, Amazon Leo, and other operators deliver latency in the 20-to-40 millisecond range against the roughly 600 milliseconds inherent to GEO altitude, and have entered the Company's historical rural and underserved markets at declining consumer price points. Hughesnet subscribers declined approximately 21.7%, to approximately 641,000 as of the Petition Date from approximately 819,000 as of June 30, 2025, a trend the Company characterizes as structural rather than cyclical and does not expect to reverse. Fixed satellite lease, ground infrastructure, and network operations costs do not decline proportionately with consumer volumes — the J3 Satellite Lease from non-Debtor EchoStar XXIV L.L.C. alone carries a monthly charge of approximately $15.9 million — and the Company reported a net loss of approximately $1.274 billion for the fiscal year ended Dec. 31, 2025 on approximately $1.4 billion of consolidated revenue, driven by consumer broadband revenue declines and a significant non-cash impairment charge. Liquidity strain surfaced prepetition in February 2026, when HSSC entered into two intercompany financing agreements with EchoStar totaling $51 million in initial principal, accruing interest at 13.75%, to fund historical J3 rent obligations owed but not timely paid.

The Debtors commenced these cases without a restructuring support agreement or prenegotiated plan. HSSC's $750 million of 5.250% senior secured notes and $750 million of 6.625% senior unsecured notes both matured Aug. 1, 2026, with payment due Aug. 3, 2026 under the indentures' "Legal Holiday" convention; accrued and unpaid interest stands at approximately $19.6 million and $24.7 million, respectively. As of the Petition Date the Debtors had no committed financing to fund the obligations, had been unable to access the capital markets on terms permitting a refinancing, and faced indenture covenants constraining incremental indebtedness and investments. Prepetition engagement with an ad hoc group of senior noteholders — represented to hold approximately 80% of the aggregate principal amount of the Senior Notes — including the exchange of term sheets reflecting proposed forbearance terms, did not produce a standstill, refinancing, or consensual restructuring prior to maturity. Wilmington Savings Fund Society, FSB succeeded U.S. Bank Trust Company, N.A. as indenture trustee and collateral agent for the secured notes on July 31, 2026. EchoStar purchased approximately $123 million of the secured notes in open market trades during 2025 and continues to hold them.

The cases open with an active intercompany dispute. On July 21, 2026, counsel to the ad hoc group asserted that certain prepetition transactions with EchoStar and its non-Debtor subsidiaries may give rise to claims — including fraudulent transfer and breach of fiduciary duty — against EchoStar, certain of its subsidiaries, and the Debtors' then-serving directors and officers, certain of whom held concurrent EchoStar roles, including Charles Ergen. The transactions identified are the terms of the J3 Satellite Lease, which the group contends requires above-market payments; approximately $1.029 billion of cash dividends paid to EchoStar in February and March 2024; approximately $196 million of income tax reimbursements made to EchoStar in 2024; and the referral of the Company's consumer subscribers to SpaceX in connection with EchoStar's sale of certain spectrum assets to SpaceX. The Debtors do not concede the merit of the allegations and reserve all rights. On July 28, 2026, HSSC appointed Anthony Horton and Michael Buenzow to the Board as independent directors and formed a Special Committee of those directors, delegating authority over conflict transactions and sole power to investigate and to prosecute, settle, or release estate claims against EchoStar and its non-Debtor subsidiaries; the Special Committee retained Kirkland & Ellis. Robert Del Genio of FTI Consulting was appointed Chief Restructuring Officer the same day. Also on July 28, the ad hoc group wrote to the Clerk of the Court objecting to any expedited hearing process in the anticipated cases, including with respect to the use of cash collateral securing the secured notes.

The Debtors do not currently project a need for debtor-in-possession financing and instead seek interim and final authority to use cash collateral, holding approximately $61.2 million in cash and cash equivalents on a bank basis as of the Petition Date, while reserving the right to seek a DIP facility if cash on hand and cash collateral prove insufficient. Proposed adequate protection for the secured noteholders consists of replacement and continuation of prepetition liens on postpetition estate property to the extent those liens were valid, properly perfected, and enforceable; section 507(b) superpriority administrative expense claims junior only to a Court-approved professional fee carve-out, in each case to the extent of any diminution in Collateral value; and budget compliance with agreed or Court-ordered variance testing. Absent interim access, the Debtors state they would have no alternative to immediate liquidation. The Debtors intend to use the cases to right-size the capital structure while shifting the revenue mix from a consumer-dominated business to an enterprise and government-led platform, supported by approximately $1.5 billion of contracted enterprise backlog as of March 31, 2026 and continued cash generation from the declining consumer segment. Between July 24 and July 28, 2026, the Debtors notified approximately 400 employees of termination, with the majority of contemplated termination dates falling between Sept. 22 and Sept. 28, 2026 — a 60-day transition period intended to satisfy applicable federal and state WARN Act requirements — during which the Debtors anticipate continuing to pay salary and benefits. These cases are separate from and separately administered from the chapter 11 cases commenced June 30, 2026 by certain other EchoStar subsidiaries, jointly administered as In re DISH DBS Corporation, DISH Wireless L.L.C., et al., Case No. 26-90627 (Bankr. S.D. Tex.) (CML), which pertain solely to EchoStar's Pay-TV and legacy Wireless segments. The Debtors state that estate assets will not subsidize or fund the obligations of EchoStar, the DISH debtors, or any other non-Debtor affiliate absent further order of the Court.

The company reports $1.9 billion in assets and $1.5 billion in liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-90739.

⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.

Chapter 11 Debtors

Affiliated Debtors Chart
Source: Bondoro, Court filings

Top Unsecured Claims

Form 204 Top Unsecured Claims
Source: Bondoro, Court filings

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