LightSquared filed for bankruptcy on Monday, just hours before a deal ran out that would have kept the company from defaulting on its debt.
LightSquared executives said they hope the filing will give the embattled company "breathing room" to gain regulatory approval for its wireless plans. It filed for Chapter 11 protecton just hours before a deal ran out that would have kept the company from defaulting on its debt.
LightSquared has been fighting for its financial life since February when the Federal Communications Commission moved to block its plan to build a nationwide wireless network.
LightSquared executives said in a statement the company is voluntarily filing for bankruptcy to "give it time to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network." They reported both debts and assets in excess of $1 billion in the Chapter 11 petition filed with the U.S. Bankruptcy Court for the Southern District of New York.
Despite pressure from creditors and no encouraging signals from the FCC, LightSquared said it fully expects to continue to operate normally during the bankruptcy.
“The filing was necessary to preserve the value of our business and to ensure continued operations," interim co-chief operating officer Marc Montagner said in a statement. "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."
The FCC initially lent support for LightSquared's plans, even mandating that the company's network eventually cover hundreds of thousands of people by 2012. But after an outcry from lawmakers, defense officials, and global positioning system manufacturers, the FCC determined that LightSquared's plans could not be made compatible with GPS transmissions.
LightSquared CEO Sanjiv Ahuja resigned over the failure, and disgruntled investors forced chief financier Philip Falcone to take a more limited role in the company's public efforts.
But LightSquared's statement on Monday indicated that its current leaders are expected to stay on through the bankruptcy process.