Hytera creditor Motorola asks court to dismiss cases, cites litigation

By Caroline Salls

Pittsburgh, July 10 – Hytera Communications America (West), Inc. creditor Motorola Solutions Corp. is asking the U.S. Bankruptcy Court for the Central District of California to dismiss the company’s Chapter 11 case, according to a motion filed Thursday.

If the bankruptcy court chooses not to dismiss the Chapter 11 cases, Motorola said it should lift the automatic stay and suspend them until pending trade secret litigation is resolved.

“Chapter 11 bankruptcy is intended to protect companies attempting to preserve a lawful business in good faith. This bankruptcy is the opposite of that,” the motion said.

Motorola said the trade secret action pending in the U.S. District Court for the Northern District of Illinois is nearly completed after a jury found in February that the Hytera debtors and their publicly traded corporate parent are liable for “willfully and maliciously stealing Motorola’s trade secrets and copyrighted source code” and awarding $765 million in damages to Motorola.

The dismissal motion said the district court is currently considering a request to permanently bar Hytera’s corporate parent from continuing to sell and use Motorola’s technology throughout the world.

Motorola said Hytera’s Chapter 11 cases were filed in bad faith to obtain a permanent injunction of the pending litigation “so that they may continue to make illegal sales of products containing Motorola’s stolen intellectual property.”

According to the motion, the Motorola judgment accounts for 97.5% of Hytera’s debt.

In addition, Motorola said no meaningful progress can be made in the Chapter 11 proceedings until its motion for a permanent injunction is resolved.

“The debtors’ business is overshadowed by the cloud of Motorola’s pending injunction motion - which could permanently shut down nearly all of debtors’ illegal business operations,” the motion said.

“Prospective purchasers will massively discount debtors’ business, its assets, and even its stock of products (at least large portions of which have been found to incorporate stolen Motorola technology) until the scope of injunctive relief is determined.”

Motorola said continuing the Chapter 11 cases at this juncture also depletes Hytera’s bankruptcy estate while it incurs increasing liability to its largest creditor as a result of ongoing illegal sales.

Hytera is an Irvine, Calif.-based communications company. The company filed bankruptcy on May 26 under Chapter 11 case number 20-11507.

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