Today, it was announced that LightSquared Inc. was filing bankruptcy in hopes of resolving the concerns of US regulators who have been blocking the build out of their high-speed wireless Internet. The company believed they would be able to service upwards of 260 million people on their network.
In the bankruptcy filing, LightSquared listed assets of $4.48 billion and $2.29 billion in debts. The bankruptcy was filed in the U.S. Bankruptcy Court in Manhattan under Chapter 11 today. Recently, the company has been negotiating with creditors, who were requesting Philip Falcone to step aside. Under current terms, Mr. Falcone will remain with the company as well as the same management team.
CFO Mark Montagner said in a statement, “Bankruptcy 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.”
On April 30, 2012, creditors asked for Falcone’s removal when they gave the company an extension to renegotiate its debt, with the intent of stopping a default. Philip Falcone runs Harbinger Capital Partners, which is the New York based hedge fund. The hedge fund has invested approximately $3 billion in LightSquared and at the time of filing bankruptcy it was reported they owned as much as 74% of the company.
LightSquared made front-page news back in February when the FCC withdrew its approval for the network after the military stated it could possibly interfere with government GPS. The original plan for the networking company was to convert satellite service airwaves into a different spectrum for land-based radio towers.
It will be interesting to see if they will get approval for the network and be able to come out of Chapter 11 bankruptcy stronger. It seems that this bankruptcy will become politicized as the company needs the FCC to approve this network to be successful after filing bankruptcy.