Satmex noteholders oppose request to dismiss involuntary U.S. bankruptcy case

By Caroline Salls

Pittsburgh, July 27 - Satelite Mexicanos, SA de CV's creditors, who filed an involuntary Chapter 11 petition against the company, opposed Satmex's motion to dismiss the involuntary case, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The petitioning creditors are holders of Satmex's senior secured floating-rate notes due 2004 and 10 1/8% senior notes due 2004.

In its motion to dismiss the case in favor of Mexican bankruptcy proceedings, 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 motion.

The petitioners, however, contend that Satmex does have substantial ties to the United States.

"Between 1998 and today Satmex intentionally, continuously and systematically conducted business in the U.S., not only to raise the capital needed to create Satmex, but also in its daily operations, to the point that Satmex generates more of its annual revenue from U.S. customers (47% in 2004) than from customers of any other country," the noteholders said in their opposition.

"When Satmex failed to pay interest on its debt securities in 2003, it hired U.S. counsel and U.S. financial advisors to negotiate a restructuring with the holders of its debt securities, 73% of which are held by the U.S.-based petitioners, which are represented by U.S. counsel and U.S. financial advisors."

According to the opposition, the U.S. bankruptcy court is the only court that can effectively and efficiently restructure Satmex's U.S.-issued and New York law-governed debt securities, "the only debt obligations of Satmex that need to be restructured."

Satmex is a Mexico-based satellite operator. The involuntary petition was filed on May 26. Its Chapter 11 case number is 05-13862.

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