Electronics Production | February 18, 2011
EB affected by Terrestar's Chapter 11 filing
A customer of ElektroBit's subsidiary Elektrobit Inc., TerreStar Corporation (TerreStar), yesterday filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code.
TerreStar is the parent company of Elektrobit Inc's customer TerreStar Networks Inc (TerreStar Networks) that has previously filed a petition for corresponding reorganization. Chapter 11 of the United States Bankruptcy Code establishes a process for reorganizing financially troubled companies. On February 15, 2011, EB's outstanding receivables from TerreStar Networks amounted to approximately USD 25.8 million (EUR 19.1 million as per exchange rate of February 15, 2011). EB announced on November 20, 2010 that it had initiated legal proceedings against TerreStar to claim repayment of its receivables from TerreStar. The claim is partly based on a guarantee issued by TerreStar of EB's accounts receivables from TerreStar Networks and partly based on TerreStar's direct contractual obligations towards EB. The legal proceedings brought by EB against TerreStar in order to collect the amounts owed to EB have now been stayed pursuant to United States bankruptcy law. It is EB's understanding that EB can assert the claim in the reorganization case now commenced.