Wireless venture LightSquared Inc. announced Monday that it has filed for bankruptcy to buy itself “sufficient breathing room” to resolve the concerns of U.S. regulators who impeded the company’s plan to deliver high-speed internet from coast to coast.
The filing provided a rare glimpse into the two-decade-old private Reston, Va.-based company’s operations, a range of unsecure creditors, and other financial backers connected to the mobile communication provider. In its Chapter 11 filing with the U.S. Bankruptcy Court in Manhattan, the company listed $4.48 billion in assets and $2.29 billion in debt as of Feb. 29.
Although LightSquared’s creditors had requested that the company’s backer, hedge fund chief Philip Falcone, to step aside, the company said Falcone will stay with the company and that it still expects to continue normal operations under the same management team throughout the filing process.
“The filing was necessary to preserve the value of our business and to ensure continued operations,” Marc Montagner, the company’s interim co-CEO and CFO said in a press release. “All of our efforts are focused on concluding this process in an efficient and successful manner.”
The firm had planned to take on AT&T and Verizon Wireless by bringing satellite 4G network to as many as 260 million people nationwide. Yet its plan to run its network using frequencies next to those used by GPS had sparked worries among U.S. regulators that LightSquared’s planned network would interfere with GPS receivers.
Without its venture fulfilled, the company would in the mean time continue to run a smaller business as a wholesale provider of spectrum and satellite services to about 300,000 customers.
The firm is expected to file a recognition proceeding in the Superior Court of Justice in Toronto, Canada.