An $18.25 million legal dispute between two Bermuda-domiciled telecommunications firms has been dismissed.

Kiskadee Communications Ltd, a Bermuda-based exempt company specialising in satellite telecommunications, sued two former directors of ProtoStar after a joint venture failed.

The now bankrupt ProtoStar, which was also domiciled in Bermuda with US operations based in San Francisco, was an Asian satellite services operator. The company was formed to acquire and operate high-power geostationary satellites to lease capacity to DTH (direct-to-home) and broadband service providers in key Asian markets.

In 2007, ProtoStar formed a joint venture with Kiskadee, whose principal shareholders include well-known Bermuda businessman, Jeffrey Conyers. The aim was to utilise one of Bermuda’s potentially lucrative satellite locations, which the United Nations and International Telecommunications Union granted to Bermuda in 1983.

In the 2008 lawsuit, filed with the US District Court of Northern California, Kiskadee claimed: ”ProtoStar’s failing financial condition, severe operational and cash flow restrictions imposed by creditors and related corporate financing constraints made it impossible for the company to act in a commercially appropriate manner on the unique satellite opportunity.”

Kiskadee alleged that ProtoStar never provided any funding for the joint venture and claimed the company also never filed an application with the Bermuda Government to get the orbital satellite location.

ProtoStar filed for Chapter 11 bankruptcy in July 2009. The Bermuda Government terminated Kiskadee’s exclusivity right the following year and the opportunity to commercialise the orbital spot expired.

Kiskadee sued former ProtoStar executives, Philip Father and Eugene Cacciamani, alleging the two misrepresented ProtoStar’s financial condition and falsely represented that the company would be able to fulfill its obligations of the joint agreement with Kiskadee.

The suit, first brought to federal court in the US, was later referred to arbitration in Bermuda. All claims have now been dismissed with prejudice.

In a statement from the defendants, Mr Father and Mr Cacciamani said: “Kiskadee’s claims were baseless and should never have been brought.”

For its part, Kiskadee said in a statement: “The company [Kiskadee] was unable to come up with the financial resources necessary to pursue the subsequent private arbitration to an evidentiary hearing or decision on the merits and withdrew its case. The claims were dismissed by mutual agreement of both parties. No finding of liability or of any bad faith by Kiskadee, was made by the arbitrators.”

The two former directors of ProtoStar are now pursuing Kiskadee Communications for nearly $1 million in legal costs. No further litigation is pending.