Theia Group Inc. must relinquish control of its assets to a third party, including the satellite startup's Federal Communications Commission license that allows the company to launch more than 100 satellites into space, a federal judge ordered.
U.S. District Court Judge P. Kevin Castel of the Southern District of New York signed the order, filed on Oct. 29, which confirmed the license is Theia's largest asset.
The order presents what may be a major setback for Theia Group and its ambitious plans for Albuquerque, which included manufacturing satellites at a massive campus called the Orion Center. The project was one of the city's leading economic initiatives, and in materials provided to city officials, it was claimed the project could spur thousands of jobs. However, in recent months, the expansion seems to have stalled as a lease for the land where the Orion Center would be located remains unsigned.
Castel's order allows a receiver — a court-appointed official — to essentially take over Theia Group, its subsidiaries and its assets. The order came as part of an August lawsuit filed in federal court by FCS Advisors LLC, part of New York City finance and investment firm Brevet Capital Management. The lawsuit claimed Theia Group owed it more than $289 million.
While Castel's order says the appointment of a receiver is an "extraordinary remedy," it adds that "the court comfortably concludes that it is necessary in this instance." The receiver can take measures such as dismissing personnel and suspending operations, according to an appendix that details the powers of the receiver filed with Castel’s order.
"Whatever the best course of action may be for preserving the value of the satellite license at issue, the Court believes that it should not be charted by Theia’s present management," Castel's order states.
Perhaps most importantly, The receiver can also seek a buyer for Theia Group's FCC license assets, according to the appendix. The license allows Theia to operate 112 Earth-imaging satellites and mandates that half must be in the air no later than May 9, 2025.
Without the FCC’s authorization, Theia Group likely has little reason to build them, let alone the Orion Center.
The frequencies granted to Theia Group by the FCC, National Oceanic Atmospheric Administration and any other government agency to construct, launch and operate a satellite constellation are estimated to be worth more than $2.4 billion, according to records filed in the FCS Advisors lawsuit.
“There is no company today. There's no money being spent in any meaningful way … all there really is, is a license and a business plan," Theia’s counsel stated during an Oct. 20 hearing, according to the order. The hearing was held to address the appointment of a receiver.
The order doesn't name who is being quoted on behalf of Theia Group, but the company is represented in the case by Motty Shulman and Robin Henry of international law firm Fried, Frank, Harris, Shriver & Jacobson LLP.
“We believe the only path for anybody getting their money back is to sell this license, and sale of this license will inevitably require some type of bankruptcy proceeding,” Theia’s counsel also stated, according to the order.
The order adds that Brevet "should open a dialogue" with Michael Fuqua, managing director of B. Riley Advisory Services, for the purpose of potentially retaining him as a receiver.
As of March, Theia Group’s CEO was Erlend Olson, who formed the company in 2015 with Joseph Fargnoli, according to declarations of Olson filed in an ongoing trademark suit. Its chief financial officer is Reid Gorman, according to a declaration of Gorman filed in September as part of the FCS suit. Public relations professional Susan Davis, who has provided statementsfor Theia Group in the past, was unable to be reached for comment.
With Castel’s order, it is unclear what will happen to the Orion Center. City councilors approved a land lease for the project in April, but the agreement has not been finalized.
As part of the lease approved by the city council, Theia Group would pay the city $2 million to cover rent for the first four years. Monthly rent payments totaling $1.24 million would begin in 2025, and rent would increase at 2% per year for four years until being set by appraisal.
About four months after the city council’s approval, in a letter from Albuquerque COO Lawrence Rael to Gorman, the city urged Theia Group to commit to the Orion Center, and pending further review from the city, sign the lease agreement by Aug. 30.
The date came and went without a signature, though the city maintained the project had not been ruled out.
FCS Advisors’s lawsuit was filed three days after Rael’s letter was sent by Peter Pierotti, counsel for the city’s aviation department.
