In a decision that nobody should find surprising, LightSquared announced today that it began voluntarily reorganizing under Chapter 11 of the U.S. Bankruptcy Code.
The company, which intends to launch a satellite-based 4G wireless network, said it took this action to gain more time to resolve what it described as regulatory issues. Its progress has been blocked by the Federal Communications Commission on grounds that its operations will interfere with essential services, a determination based on evidence and testimony from the U.S. military and the GPS industry.
LightSquared is 96 percent owned by Philip Falcone’s Harbinger Capital Partners. Carl Icahn sold his $250 million debt holdings earlier this month, and the company’s other lenders agreed to grant a second extension on LightSquared’s debt-term violations that have now expired.
“The filing was necessary to preserve the value of our business and to ensure continued operations,” 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.”
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. Pending court approval, it is proposed that the debtors be jointly administered under case number 12-12080 and be represented by Milbank, Tweed, Hadley & McCloy LLP.
LightSquared – official site
Kurtzman Carson Consultants – LightSquared Chapter 11 documents
Photo by Flickr user kenteegardin, used under Creative Commons license