## Facts

- DBSD North America, Inc. and affiliates entered Chapter 11 while developing (but not fully operating) an integrated satellite/terrestrial mobile communications network using FCC-licensed spectrum.
- At filing (May 15, 2009), DBSD’s capital structure included a $40 million first-lien revolver, roughly $740 million in second-lien convertible senior secured notes, and unsecured claims including an unliquidated claim held by Sprint arising from FCC spectrum-relocation matters; the equity was held almost entirely by ICO Global.
- DBSD proposed a reorganization plan under which senior secured creditors would receive equity in the reorganized entity; unsecured creditors would receive a distribution; and existing equity (ICO Global) would receive shares and warrants despite unsecured creditors not being paid in full.
- After the plan process was underway, DISH (a competitor) purchased all first-lien claims and a substantial amount of second-lien claims at par, becoming the sole first-lien lender and a significant second-lien holder.
- Internal DISH materials reflected an intent to use the debt position to control the Chapter 11 process and obtain DBSD’s strategic assets; DISH voted against DBSD’s plan and advanced a competing plan aimed at obtaining control of DBSD’s spectrum-related assets.
- DBSD moved to designate (disqualify) DISH’s plan votes under 11 U.S.C. § 1126(e) for lack of good faith; DISH objected to confirmation on multiple grounds, and Sprint objected based in part on absolute priority concerns.

## Issues

1. Whether DISH’s rejection of the plan should be designated under 11 U.S.C. § 1126(e) because its claim purchases and voting were primarily driven by competitive and acquisition motives rather than creditor recovery.
2. If DISH’s votes were disregarded, whether DBSD’s plan satisfied confirmation requirements under 11 U.S.C. § 1129, including impaired accepting class requirements and feasibility.

## Decision

- The court granted DBSD’s motion to designate DISH’s votes under § 1126(e).
- The court found DISH acquired and exercised its voting rights primarily to obtain strategic control over a competitor and its assets, not to maximize recovery on the claims it held.
- With DISH’s votes excluded, the court determined the plan met the voting requirements necessary to proceed with confirmation notwithstanding dissenting creditors.
- The court rejected DISH’s feasibility objection and concluded the plan satisfied § 1129(a)(11).
- The court confirmed DBSD’s plan over objections.

## Legal Principles

- Under 11 U.S.C. § 1126(e), a bankruptcy court may designate a creditor’s plan vote if acceptance or rejection was not in good faith.
- A creditor may act in its own economic self-interest, but a vote may be designated when the creditor’s primary purpose is to obtain a non-creditor advantage (e.g., competitive harm or acquisition control) that threatens the reorganization process rather than improving treatment on its claim.
- Good-faith designation is a fact-intensive inquiry focusing on motive, conduct, and the relationship between the voting stance and legitimate creditor interests.
- Once designated votes are excluded, the court evaluates plan confirmation under § 1129, including satisfaction of voting prerequisites and feasibility.

## Conclusion

The bankruptcy court held that a competitor’s strategic use of purchased debt to block a plan and pursue control of the debtor could constitute bad-faith voting under § 1126(e), warranting designation of its votes; with those votes disregarded, the court confirmed the Chapter 11 plan after finding the statutory confirmation requirements, including feasibility, were met.


DISH Network Corp. v. DBSD N. Am., Inc. (In re DBSD N. Am., Inc.), 421 B.R. 133 (Bankr. S.D.N.Y. 2009)