MEXICO CITY — U.S. creditors of troubled Mexican satellite communications company Satmex, which has defaulted on more than $700 million in debt, are fighting to get bankruptcy proceedings heard in the U.S. rather than in Mexico.
Last week, Satmex filed for protection from creditors in a Mexican court. Move came a month after a group of U.S. creditors owed more $379 million filed to force Chapter 11 proceedings in a New York court.
Thursday was Satmex’s deadline to respond to the U.S. court, and while no details had been released, the company is likely to argue that bankruptcy proceedings should take place in Mexico. The U.S. judge could cede the case to Mexican courts or assert jurisdiction and unleash a legal battle.
The group of creditors said in a statement that the Mexican government, which owns a 24% stake in the company and also has sway over it as communications regulator, appears to be pressuring Satmex.
Creditors say the Mexican government fears it will be unable to recoup the $188 million it is owed by Satmex’s majority stakeholders in U.S. courts. Under U.S. bankruptcy law, such debt cannot be considered a liability of the company.
The creditors have presented a plan that would inject $55 million into the company to launch a satellite that has been sitting in a warehouse for two years. They say U.S. courts will resolve the restructuring faster than Mexico’s murky judicial system.
Satmex, 49% owned by Loral Space & Communications, said in a statement that proceedings in Mexico would ensure a launch by the beginning of 2006 as well as fair treatment of creditors.
Satmex competes in the U.S. feevee market with Satmex Maximo, a mix of Latin American free and pay channels.