Partial Victory For Motorola In Iridium Case

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Motorola has attained a small victory from certain claims arising from a lawsuit concerning the collapse of Iridium. Unsecured creditors have been going after Motorola due to the collapse of the satellite phone company.

In 1997, Iridium stormed the market when it started providing satellite-based mobile phone services. Users could communicate anywhere in the world with satellite based connections. But the company couldn’t find too many customers who were willing to pay as much as $7 per minute for having the privilege of using a satellite based phone. The company filed for bankruptcy after two years. The bulky size of the Iridium phones was also quoted as the reason for this.

The creditors had asked for $3.45 billion from Motorola claiming that was liable for Iridium’s collapse because it saddled the unit with debt and a poor business plan as consumers shunned its bulky, expensive phones. U.S. Bankruptcy Judge James Peck in New York said on Friday that couldn’t be proved Iridium was insolvent before its 1998 launch. He also dismissed two theories from Iridium creditors, saying they failed to prove their theories that Motorola was either insolvent or had “unreasonably small capital” during the four years leading up to the bankruptcy.

A representative for the company expressed understandable relief about the decision.

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