RESTON, VA.: LightSquared has filed for Chapter 11 bankruptcy in Manhattan, listing more than $1 billion in debts and in assets. The company said it filed voluntarily to give itself “time to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network.”
“The filing was necessary to preserve the value of our business and to ensure continued operations. The voluntary Chapter 11 filing is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network,” said Marc Montagner, interim co-chief operating officer and chief financial officer of LightSquared. “All of our efforts are focused on concluding this process in an efficient and successful manner.”
LightSquared and its subsidiaries are rolled into the filing. The company said it “fully expects to continue normal operations” throughout the process, and that the current management team would remain in place.
The filing was made in the U.S. Bankruptcy Court for the Southern District of New York and the recognition proceeding will be filed in the Superior Court of Justice in Toronto, Ontario.
Among its 20 largest creditors who filed claims against LightSquared, Boeing Satellite Systems in El Segundo, Calif., says it’s owed nearly $7.5 million; Alcatel-Lucent in Paris, France—$7.3 million. Both claims are listed as trades in nature, and “contingent,” and “disputed” by LightSquared. The remaining listed claims are less than $1 million, including several those for various landlords.
LightSquared’s business model was predicated on launching a wholesale 4G wireless broadband network on spectrum designated for satellite transmissions. It managed to score a conditional waiver from the Federal Communications Commission in January 2011, allowing it to use that spectrum for primarily terrestrial transmissions, as long as they didn’t interfere with global positioning systems. Network trials demonstrated interference, and despite LightSquared’s efforts to mitigate, arguments that subsequent tests were rigged and continued pleas for more experimentation, the commission pulled the waiver three months ago.
The company vowed to continue working on its network, but it had burned up a substantial chunk of its cash seeking full FCC approval. It’s primary underwriter, New York-based hedge fund Harbinger Capital, sunk around $3 billion into the venture under fund manager Phil Falcone, who serves on LightSquared’s board. Creditors called for Falcone’s ouster on April 30, when they gave LightSquared a seven-day extension to renegotiate its debt, according to Bloomberg.
~ Deborah D. McAdams
See...
LightSquared’s announcement
February 2, 2012:“LightSquared Vows to Continue Despite Terrestrial Network Nix”
LightSquared is not giving up on its proposed wireless broadband network despite losing its authority to launch on a terrestrial infrastructure.
