LightSquared, once a promising facilitator of low-cost broadband access for 260 million users, filed for bankruptcy this week after losing a brutal fight with the GPS industry in the U.S.
Based in Reston, Virginia, LightSquared listed debt and assets of more than $1 billion each in a Chapter 11 filing today in U.S. Bankruptcy Court in New York City, Bloomberg News reported. Reports said the court filing came after intense negotiations with creditors, who had requested that the company’s main backer, Philip Falcone, resign.
Falcone’s hedge fund, Harbinger Capital Partners, invested approximately $3 billion in LightSquared and owned about 74 percent of the company as of Jan. 27. Falcone also had served on LightSquared’s board. Bloomberg reported that creditors asked for Falcone’s departure when they gave the company a weeklong extension on April 30 to stave off a default and to keep trying to renegotiate its debt.
Last week, the company received a second weeklong extension from creditors, delaying a potential bankruptcy. Bondholders earlier gave Falcone a deadline of April 30 to revisit a waiver that avoided triggering a technical default on its debt.
LightSquared had depended on winning FCC approval to convert airwaves originally designated for satellite service to spectrum for land-based radio towers. The company had invested $4 billion in spectrum and reached deals with more than 30 partners.
Trouble for the company began last December, when a draft summary of test results showed that LightSquared signals interfered with about 75 percent of GPS receivers.
In February, the administrator for the National Telecommunications and Information Administration sent a letter to the FCC chairman saying there were “no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment.”
That was the beginning of the end of LightSquared.