Telesat Corp. Faces Legal Action from Creditors Over Alleged Asset Transfer
Background
Telesat Corporation, a Canadian satellite operator listed on the Toronto Stock Exchange, operates a global network of low‑earth‑orbit (LEO) satellites. The company has been under financial pressure, with approximately CAD 1.7 billion of debt maturing in December 2026 and CAD 438 million due in 2027.
Legal Proceedings
On 21 January 2026, a coalition of bondholders filed a lawsuit in the Supreme Court of the State of New York against Telesat Canada, a subsidiary of Telesat Corp. The creditors allege that the company engaged in a “fraudulent” transfer of its most valuable asset—the Lightspeed LEO network—to an indirect subsidiary. The move, reportedly completed in September 2025, transferred 62 % of the equity in the Lightspeed unit to a subsidiary controlled by Telesat’s parent company. As a result, Telesat Canada retained only a 38 % minority stake and lost control over the LEO network.
The creditors claim that the transfer was made to shield the asset from creditors before debt repayment deadlines and that it violated lending terms. They also contend that Telesat has taken no action to address the upcoming debt maturities. The lawsuit, filed by the Wilmington Savings Fund Society on behalf of 90 % of the $1.7 billion in debt, accuses Telesat of non‑arm’s‑length and fraudulent transactions that undermine lender recoveries.
Company Response
Telesat’s president and CEO, Dan Goldberg, stated that the company operated within its covenants and the law. He emphasized that the transfer was a legitimate corporate decision aimed at maintaining governance practices. A spokesperson for Telesat did not provide an immediate comment at the time of the filing.
Market Reaction
Following the announcement, Telesat’s share price fell sharply, breaking its 52‑week low of CAD 20.55 and trading at CAD 48.06 on 19 January 2026. The decline reflects investor concern over the company’s liquidity position and the potential impact of the lawsuit on its financial stability.
Implications
The lawsuit highlights the risks associated with debt‑heavy satellite operators that rely on capital-intensive infrastructure. If the court sides with creditors, Telesat may face forced restructuring or asset liquidation. Conversely, a ruling in favor of the company could reinforce its strategic control over the LEO business but may further strain relationships with lenders.
