Mobile satellite communications firm LightSquared has applied to a New York court for Chapter 11 bankruptcy protection, after failing to reach an agreement with its creditors over outstanding payments.
The firm filed for Chapter 11 under the guidance of its principle shareholder, hedge fund Harbinger Capital Partners. Under US law, the process should allow directors of LightSquared time to restructure its debts while in court protection.
LightSquared has already reached agreements with some creditors, including a $56.3 million payment to satellite communications firm Inmarsat. However, other creditors such as Boeing Satellite Systems and Alcatel-Lucent are still awaiting payments.
The Chapter 11 announcement is just the latest in a series of troubling events for LiqhtSquared this year. After its boosted satellite signals were found to interfere with GPS navigation system reception, the firm lost its US Federal Communications Commission licence to build ground repeaters for 4G satellite-based mobile communications systems.
LightSquared chief executive Sanjiv Ahuja subsequently resigned from the firm in late February. Then in March, the US Sprint terrestrial mobile communications network - which had planned to let LightSquared share its ground network - dissolved its agreement with the firm.
It also emerged in March that LightSquared's SkyTerra 1 satellite had been temporarily knocked out by a solar storm.