LightSquared has officially filed for Chapter 11 bankruptcy status, according to a report from Bloomberg.
The company once heralded for attempting to bring high-speed wireless access to as many as 260 million Americans met tough criticism from the FCC, which found that LightSquared’s technology had the potential to essentially unleash fury on GPS networks akin to that unleashed by a woman scorned.
LightSquared’s filings indicate it has assets of $4.48 billion and debts of $2.29 billion as of February 29th. LightSquared’s creditors were seeking a deal that would oust CEO Philip Falcone, who will remain alongside the current management team as LightSquared works through the regulatory process in hopes of jumpstarting its efforts to create a nationwide 4G network.
Falcone issued the statement in light of today’s filing:
“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. We remain committed to our original mission, and I remain steadfast in my belief that a path forward exists that will satisfy and benefit all constituencies.”
The bankruptcy filing is the latest in a string of unfortunate events for LightSquared. The FCC ruled against the company in February, which killed several deals that were dependent on LightSquared obtaining FCC approval. Then in March, Sprint ended an 11-year agreement to build, operate, and share the network with LightSquared. LightSquared had given Sprint $310 million in advance, of which Sprint will return $65 million. LightSquared has essentially been defaulting on its debt payments since February to Inmarsat Plc, though the company reports it did so due to unmet contract stipulations.
Time will tell whether LightSquared will emerge from bankruptcy with different plans for a new network, or whether they’ll emerge at all. The process of rebuilding a network is a long and likely costly one, which could prove too much to bear for a company which owes a lot of money and has already made significant investments in technology it cannot fully use. The company will likely sell the spectrum to another spectrum-hungry organization that can better use the technology.
This isn’t the last we’ve heard of LightSquared, and we still hope they come out of bankruptcy stronger than ever before. The industry needs more competition.