High-flying wireless start-up LightSquared filed for Chapter 11 bankruptcy protection in a New York court yesterday.
The company said it had $4.48 billion in assets and $2.29 billion in debt at the end of February.
Creditors had demanded that Philip Falcone of Harbinger Capital, LightSquared’s main backer, step aside. According to the bankruptcy filing, he will stay with the company, Bloomberg said.
The company said the filing was meant to give LightSquared “breathing room” to pursue regulatory approval for its 4G wireless network.
LightSquared owns the rights to a significant chunk of wireless spectrum, but has faced opposition to using that spectrum, originally designated for satellite communications, for wireless traffic. Opponents claim wireless signals on that part of the spectrum might interfere with the global positioning system (GPS).
Though the FCC was originally receptive to LightSquared’s plan, opponents eventually persuaded the agency to withdraw its preliminary approval in February.
In papers contained in the bankruptcy filing, company officials said they expected negotiations with regulators to take up to two more years.
Harbinger Capital Partners has a 74% stake in LightSquared, worth about $3 billion. In a statement, Falcone said bankruptcy was meant to save the company from creditors “looking for a quick profit.”
Opponents of LightSquared’s plan including GPS-dependent companies, including FedEx (NYSE:FDX), United Parcel Service (NYSE:UPS) and Garmin (NASDAQ:GRMN).