ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, May 21, 2008

Motorola Judgment Reduced from $4 Billion to Zero


Business Week, picking up a story from the Associated Press, reports that a bankruptcy judge has approved a settlement in the Iridium case, reducing Motorola's liability from $4 billion to zero.  According to The Register, Iridium was and is a mobile phone system based on connecting cell phones directly to satellites.  Motorola made cell phones for Iridium's network of satellites.  Iridium filed for bankruptcy in 2001, and its creditors sought recovery from Motorola on a number of claims, including breach of contract.  The Register described the original damages estimate as a "whacking great sum."  Love those Brits!  The Register also suggests that the real cause of Iridium's bankruptcy has less to do with Motorola than with the extraordinarily high cost of making phone calls using satellite technology, which is also somewhat antiquated at this point.

This week, Judge James M. Peck approved a settlement agreement between Motorola and the creditors, according to which Motorola will pay nothing.

[Jeremy Telman]

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