EchoStar's bankrupt subsidiary Hughes Network Systems is pushing back against a lender group's bid to take over its chapter 11 case amid a dispute over prebankruptcy dividend payments.

The telecommunications company said in a Monday court filing that a group of noteholders, including investment firms Capital Group, Silver Point Capital and Lord Abbett, violated bankruptcy law by seeking to terminate Hughes Network's exclusivity period and filing a competing reorganization proposal of their own.

The company asked U.S. Bankruptcy Judge Alfredo Perez in Houston to strike the proposal and sanction the lenders, including by stripping their voting rights.

Hughes Network filed for bankruptcy in early August to restructure its $1.5 billion in debt. The proceedings quickly turned contentious, with the noteholder group and the U.S. Trustee's Office, a unit of the Justice Department that acts as the nation's bankruptcy watchdog, raising concerns about prebankruptcy transactions.

At the center of the issue were more than $1 billion in dividend payments that Hughes Network made to its parent, billionaire Charlie Ergen's EchoStar, in 2024. Hughes lenders said the payments drained capital that could have been used to repay their claims and instead benefited EchoStar.

Last week, the noteholder group said Hughes Network's bankruptcy was at a standstill because the company and its lenders failed to agree on who should serve as a mediator to resolve their disputes and the scope of an independent investigation by a court-mandated examiner.

"The resulting paralysis serves no one except EchoStar, which benefits from every day of delay as estate resources are consumed and efforts to recover from it are delayed," the noteholders said in court papers.

During the impasse, the lender group, which holds a majority of EchoStar's senior secured and senior notes, unveiled its alternative proposal.

Under the lenders' proposed restructuring, the equity in a reorganized Hughes Network would go to senior secured noteholders. The plan also includes a litigation trust to pursue claims against EchoStar and its executives, as well as a sale process.

Hughes Network countered that the noteholder group's decision to file a competing plan violates bankruptcy rules that typically grant the company the exclusive right to propose a plan during the first 120 days in chapter 11. The noteholder group filed its motion less than 40 days into the case.

The proposed plan only serves the noteholders, who want to litigate against the company and EchoStar, Hughes Network also said.

"As much as the noteholder group may believe it should speak for the debtors' estates, it does not," the company said.