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RealTime IT News

Lucent Loses First Round of Bankruptcy Suit

A U.S. Bankruptcy Court ruled against Lucent Technologies in a breach of contract and bankruptcy suit originally brought by the trustees for Winstar Communications, Lucent's general counsel said today.

The decision, handed down in federal court in Wilmington, Del., late Wednesday, stems from a case that wrapped up in June. Judge Joel B. Rosenthal ordered the telecom giant to pay $244 million, plus statutory interest and other costs to the Winstar trustees.

In April 2001 broadband communications provider Winstar filed for Chapter 11 protection under the U.S. Bankruptcy Code, and at that time announced a breach of contract suit against Lucent seeking $10 billion in damages.

The suit also sought a court order requiring Lucent to live up to terms of its partnership agreement with Winstar, including a $90 million payment that Winstar said Lucent failed to make.

In the suit, Winstar claimed Lucent's failure to live up to its contractual agreement forced it to seek protection from creditors by filing for bankruptcy.

Bill Carapezzi, Lucent's general counsel, said the company would examine the judge's ruling carefully and expected to appeal the verdict.

"We have made strong arguments supporting our view that this suit was without merit," Carapezzi said in a statement.

Lucent said the two companies signed a five-year supply agreement in October 1998 calling for Lucent to supply Winstar with wireless broadband network systems for business customers. Lucent also agreed to provide up to $2 billion in equipment financing.

Lucent expects the verdict to result in a charge of about $300 million in its first quarter ending Dec. 31.