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Iridium creditors suffer setback

September 01, 2007|From Bloomberg News

Motorola Inc. didn't knowingly mislead investors about the prospects of its failed Iridium satellite unit, a bankruptcy judge ruled Friday.

It couldn't be proven that Iridium was insolvent before its 1998 launch, U.S. Bankruptcy Judge James Peck in New York said in a written ruling. His finding will prevent Iridium creditors from recovering at least some of the $3.45 billion they claim Motorola owes them under a theory that it was liable for Iridium's collapse because it saddled the unit with debt and a poor business plan.

"The fact that Iridium failed in such a spectacular fashion stands out as a disturbing counterpoint to the market's optimistic predictions of present and future value," Peck wrote in his decision, which closes the first phase of a 6-year-old case.

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