J.P. Morgan and 17 other lenders are facing off in the New York Supreme court on Nov. 19, over claims the banks were fraudulently induced by Motorola and Iridium to enter into a credit agreement. Questions to Motorola officials were referred to Scott Wyman, spokesman for Motorola, who explained that after Iridium went bankrupt, the J.P. Morgan workout team went after Motorola, which "wholly disagrees on the case." Calls to the J.P. Morgan press office were not returned.
The case revolves around lender claims that Motorola was obligated to provide a $300 million guarantee to Iridium, which it did not. J.P. Morgan now wants the $300 million back with legal fees. The lawsuit has not impacted the ability of Motorola to access the markets, said Robert Ray, an analyst at Moody's Investors Service, noting several renegotiations have been completed. Clearly any settlement would require financing, but Motorola has a significant balance sheet, he added.