Dec 10 (Reuters) - A U.S. appeals court has ruled that satellite company DBSD North America’s reorganization plan violated bankruptcy law and remanded the case back to a Manhattan court for further proceedings, regulatory filings showed.
DBSD North America’s parent, ICO Global Communications (Holdings) Ltd ICOG.O, said in a filing with the U.S. Securities and Exchange Commission (SEC) that the Second Circuit Court of Appeals ruled on Monday that the reorganization plan filed by DBSD violated the absolute priority rule.
ICO Global said the value of its investment in DBSD North America, which currently stands at $23.7 million, may be materially impaired as a result of the ruling.
“Until the opinion is issued and further proceedings transpire, we cannot estimate the amount of the impairment, if any, or the amount of any future required cash expenditures,” ICO Global said.
DBSD was formed in 2004 to design and develop a mobile satellite and ground network for wireless communications. It filed for Chapter 11 bankruptcy in May last year with $813 million in debt.
The company’s restructuring plan was approved in October 2009 by the court but was appealed by some creditors.
Shares of ICO Global, which traded at 59 cents at the time of the Chapter 11 filing, were flat at $1.71 on Friday on Nasdaq. (Reporting by Santosh Nadgir in Bangalore; Editing by Joyjeet Das)