Telesat said on Jan. 21 that lawsuits filed by certain creditors challenging a 2025 equity distribution are “without merit,” as the company moves to defend itself against legal action in the United States and Canada.
The company confirmed reports that creditors holding portions of its geostationary orbit (GEO) debt have filed lawsuits in New York and Ontario. The legal actions relate to an equity distribution carried out in September 2025 involving Telesat’s low Earth orbit business.
According to reporting by The Globe and Mail, the lawsuits were brought by creditors representing about 90% of roughly $1.7 billion in outstanding debt. The plaintiffs allege that Telesat improperly transferred its low Earth orbit assets in order to shield them from creditors.
In September 2025, Telesat disclosed that it had distributed 62% of the equity in its Telesat Lightspeed business to an indirect subsidiary of Telesat Corporation, as part of a broader restructuring of its corporate holdings.
“The lawsuits, filed at the direction of a group of distressed debt hedge funds, are without merit,” Telesat said in a statement. “The equity distribution at issue followed a robust governance process and was accomplished in strict accordance with relevant debt agreements and applicable law. Telesat intends to defend itself vigorously.”
Telesat has been developing the Lightspeed constellation as a next-generation LEO broadband network aimed at enterprise, government and mobility customers, while continuing to operate a fleet of GEO satellites. The company has previously said that separating its GEO and LEO activities was intended to support long-term financing and strategic flexibility.
The legal dispute adds uncertainty as Telesat advances the Lightspeed program, which has received backing from the Government of Canada and the Government of Quebec. The company did not provide further details on the timing of the court proceedings.
