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.
