EchoStar, StarBand settle out of court
By Paige Albiniak -- Broadcasting & Cable, 6/24/2002 5:00:00 AM
EchoStar Communications Corp. and StarBand Communications Inc. have settled their differences over a billing dispute that StarBand claimed forced it toward bankruptcy and cost it about $3 million.
EchoStar's dealers had been reselling StarBand's broadband-satellite offering, but in February, EchoStar pulled the plug on its relationship and its $100 million investment in the company, which is headquartered in McLean, Va., and is the subsidiary of Gilat Satellite Networks Ltd., an Israel-based company.
In a lawsuit filed in U.S. District Court in Virginia, StarBand alleged that even though EchoStar had severed the relationship, it still was collecting nearly $400,000 per week in revenue from StarBand customers that EchoStar was not turning over to StarBand. That was costing StarBand enough that it was forced to file for Chapter 11 last month. StarBand had intended to include its suit against EchoStar into its bankruptcy proceedings, but the settlement eliminates that need.
In an agreement delivered to U.S. Bankruptcy Court in Delaware, EchoStar agreed to pay StarBand $710,000 and to turn back over to StarBand the records of 16,000 retail customers. EchoStar will also pay StarBand $35 per month for each of the 15,000 customers to whom EchoStar sells wholesale service.
A bankruptcy judge must approve the agreement within 30 days.
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