LightSquared filed for bankruptcy protection in the US court, in a move it said is intended to “give it time to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network.”
Marc Montagner, interim co-chief operating officer and CFO of LightSquared, said in a statement that “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.”
According to reports earlier this week, LightSquared was unable to come to an agreement with its lenders about the future direction and ownership of the company, with some suggestion that investors wanted to “flip” it in order to generate a return on their investments.
In a statement, Philip Falcone, the hedge fund manager who was a driving force behind LightSquared, argued: “Today's filing was not an option the company embraced quickly or easily, but it was necessary to protect LightSquared against creditors who were looking for a quick profit, as opposed to our goal to create long-term market competition, job creation, and the promise of wireless connectivity for every American.”
LightSquared seems to believe that it has a future as an operating entity, despite the fact that the US Federal Communications Commission has withdrawn its permission for the company’s planned network.
There has been widespread concern that the LightSquared infrastructure will interfere with GPS receivers, which operate using a neighbouring frequency band.
According to Bloomberg, LightSquared creditors include Boeing Satellite Systems, which is owed US$7.5 million, and Alcatel-Lucent, which is owed US$7.3 million.