Pegasus asked a bankruptcy court to set a schedule for its suit a...

The suit is a new one among the companies, which had been in litigation for 3 years. Pegasus filed this complaint in June (CD June 16 p5) after DirecTV and NRTC announced they had signed new distribution agreements that excluded Pegasus (CD June 3 p8). The suit is part of its filing in the U.S. Bankruptcy Court, Portland, Me. Pegasus said the “2-track approach” is necessary because even an expedited ruling on the preliminary injunction appeal might not give the parties time for discovery. Pegasus asked for a trial date the week of Aug. 16 and asked that the issue of any damages be tried in a separate phase. Pegasus also submitted discovery requests, asking for documents from NRTC and DirecTV -- including from the most recent termination agreement, the Aug. settlement (CD Aug 12 p3), termination of the member agreements and the distribution agreement between NRTC and Hughes Communications Galaxy from 1992. Meanwhile, some of Pegasus’ senior secured lenders objected to a proposal from Pegasus asking to implement an employee retention plan. Pegasus submitted the plan to the court in June, saying the “high stakes” of its ongoing litigation with DirecTV and NRTC might prompt a “mass exodus of employees.” Pegasus said the “NRTC’s purported notice of termination effective as of Aug. 31, 2004, has most employees believing that they may be out of work, at the latest, by the end of the summer.” Pegasus proposed a plan that would cover only 100 management employees working with the satellite division. The 3-part plan -- including a monthly incentive, a retention award (distributed monthly) and severance pay -- would cover 12 months beginning July 1 just past. The company estimated it would pay out more than $8 million for the monthly incentive and retention awards. If all covered employees were terminated, severance pay would cost an additional $3.7 million. Pegasus said it may reevaluate staffing needs between Dec. 31 and June 30, 2005, due to the litigation, resulting in a reduction in retention award payments. The lenders told the court the proposal should be rejected because estimated payments “are wildly excessive given the current position of these cases.” The lenders said Pegasus’ cash collateral could be used only for ongoing business expenses according to a budget: “The amounts requested… are not set forth in any budget submitted to the [lenders].”