Hytera America files Chapter 11 bankruptcy, citing Motorola Solutions litigation woes

Hytera America and Hytera Communications America (West) filed for Chapter 11 bankruptcy this afternoon in a move the company described as a “routine financial restructuring” to address financial issues associated with ongoing litigation and the impact of the COVID-19 pandemic on its U.S. business.

Hytera filed voluntary petitions for Chapter 11 bankruptcy relief in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division) “for the purpose of preserving its U.S. business operations,” according to an announcement posted today on the Hytera America web site.

“Nearly twenty years ago, Hytera began partnering with American dealers and bringing the most innovative and valuable land mobile radio (LMR) solutions to the market, while constantly seeking to improve support and service to our dealers and customers,” Hytera America President Alla Huang said in a prepared statement.

“We remain committed to our tradition of excellence and are confident in our sustainable growth for the future. We look forward to introducing our new product lines such as Hytera HALO Nationwide Group Communications, a total solution of PoC hardware, software and cloud services, as well as facial recognition and temperature-measuring integrated access control solution, and next-generation digital mobile radio (DMR).”

Hytera America’s “service and support to dealers and customers should experience little to no interruption during the restructuring process,” according to the company’s online statement. “Hytera is confident its operation will remain viable in the American market after the restructuring process is completed.”

A Hytera spokesperson told IWCE’s Urgent Communications that the company made the filing this afternoon but said the company is not making any statements about the matter at this time beyond the online announcement.

Motorola Solutions did not respond to requests for a comment from IWCE’s Urgent Communications in time to be included in this article.

Hytera America’s bankruptcy filing was executed less than three months after U.S. District Court Judge Charles Norgle of the Northern District of Illinois entered a judgment in March requiring Hytera Communications to pay Motorola Solutions $345.8 million in compensatory damages and $418.8 million in punitive damages.

During the trial, a Hytera attorney reportedly described the financial compensation sought by Motorola Solutions as a “bankrupting amount.” In February, the jury unanimously awarded Motorola Solution the full damages the company sought, and Norgle affirmed the verdict.

Motorola Solution also is seeking a post-trial ruling for a permanent injunction that would prohibit Hytera from selling a substantial amount of its DMR product portfolio anywhere in the world. Attorneys for Hytera—representing China-based Hytera Communications and subsidiaries such as Hytera America and Hytera Communications (West)—are seeking a new trial. In addition, Hytera has argued that any U.S. ruling should apply only to Hytera’s U.S. business, not the company’s activities in other countries throughout the world.

Attorneys for Hytera and Motorola Solution are scheduled to meet in a mediation session on Thursday, according to a joint status report filed by the companies earlier this month with the federal court in Chicago. Sources familiar with the case have noted that the sides have participated in mediation sessions previously during the litigation without resulting in any broad settlements on the most important disputes in the case.

If there is no settlement agreement, Hytera would be required to file briefs opposing the permanent-injunction request by Motorola Solutions. Motorola Solutions’ deadline for filing a reply on the matter would be June 23. At that point, the injunction decision would be left to the judge.

During the trial, Hytera attorneys acknowledged that three former Motorola [the company had not yet changed its name to Motorola Solutions at the time] employees—Samuel Chia, Y.T. Kok and G.S. Kok—accessed more than 7,000 Motorola documents prior to each of them leaving and joining Hytera shortly in 2008. However, Hytera attorneys described the three engineers as “bad apples” who did not share with anyone else at Hytera that the DMR trade secrets and software were taken from Motorola.

If Hytera’s request for a new trial is not granted, Hytera attorneys argue that the award to Motorola should be reduced significantly.

In contrast, Motorola Solutions asks that the financial award that China-based Hytera should pay should be increased by including the profits that Hytera has realized during the time since the trial started, interest and attorney fees.

Hytera America’s online statement indicates that one of the two main reasons for the LMR company to file Chapter 11 bankruptcy is the impact of the COVID-19 pandemic, but the statement does not identify how the health crisis has impacted the company negatively. Hytera’s statement does outline some of the company’s initiatives associated with efforts to combat the pandemic.

“Two-way radios are an essential tool in crisis management,” according to the Hytera America statement. “Hytera America and its dealers are working together to provide effective communications solutions for the fight against the COVID-19 pandemic.

“Hytera America has donated two-way radios to multiple hospitals to support healthcare professionals, especially in hard-hit cities such as New York. Since the time the stay-at-home orders were put in place, Hytera America has implemented a comprehensive plan to both keep its employees safe and to continue essential operations that include product delivery, repairs, and services.”