Satmex asks court to dismiss involuntary Chapter 11 case

By Caroline Salls

Pittsburgh, July 8 - Satelites Mexicanos, SA de CV asked the U.S. Bankruptcy Court for the Southern District of New York to dismiss the involuntary Chapter 11 filing brought against it May 25 by holders of $377 million in Satmex bonds, according to a Friday filing.

On June 30, Satmex's concurso petition with the Mexican Bankruptcy Court was admitted and a stay against all enforcement proceedings against Satmex was entered.

Now, Satmex said the involuntary case should be dismissed because the court "lacks personal jurisdiction over Satmex to sustain a bankruptcy case and exercising such jurisdiction would be unfair and unreasonable under the circumstances."

In the filing, Satmex said it does not possess the minimum contacts with the United States necessary for a U.S. court to invoke bankruptcy jurisdiction over all of its assets, all of its operations and all of its liabilities.

Additionally, Satmex said it is a Mexican corporation with all of its assets outside of the United States.

None of Satmex's employees are located in the United States and it does not have an office in the United States, according to the filing.

"Furthermore, it would be particularly unfair and unreasonable to exercise jurisdiction over Satmex when a reorganization proceeding is pending in its home country, it is unlikely that any order of this court would be recognized or enforceable in Mexico and the participation and consent of the Mexican government as grantor of Satmex's Orbital Concessions - its lifeline - to any restructuring is required under Mexican law," Satmex said in the filing.

According to the noteholders' involuntary filing, they believe that implementing the terms of their debt restructuring through a formal Chapter 11 plan of reorganization would substantially improve the company's capital structure and allow it to better serve the needs of its customers.

Under the restructuring agreement, the noteholders have agreed, subject to certain conditions, to provide up to $55 million in debtor-in-possession financing to launch Satmex 6, the company's new satellite, which has been stored at the Arianespace launch facility in French Guiana for the last 18 months because Satmex has not had sufficient capital to fund its launch.

Also under the agreement, allowed claims of trade creditors would be paid in full, permitting the company to continue to operate without interruption.

The agreement also provides that current shareholders - including Loral Space & Communications Ltd., Principia, SA de CV and the Mexican government - will maintain majority control of the reorganized company.

Satmex is a Mexico-based satellite operator. Its Chapter 11 case number is 05-13862.

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