Decided alongside the Loral matter discussed below, Plaintiff noteholders of Loral Space and Communications Inc. (“Loral”) and its subsidiary, Loral Skynet Corporation (“Skynet”), brought suit against Skynet for breach of the implied covenant of good faith and fair dealing. Plaintiffs claimed that redeeming notes issued pursuant to a redemption right was improper where MHR had sufficient control itself to ensure satisfaction of the provision requiring that not more than 2/3 of the noteholders object to redemption. In addition, MHR agreed to support early redemption if Loral entered into a strategic transaction at its direction, leading Plaintiffs to claim that MHR received consideration that was not given to other noteholders. The Court rejected Plaintiffs’ claim, holding the parties to their bargain because the notes did not contain any contractual restriction on payment for consent and no reasonable expectancy was upset by redemption.
