LightSquared Files for Chapter 11 Bankruptcy

LightSquared, the company trying to build a hybrid satellite-terrestrial mobile broadband wireless system despite concerns that it might interfere with reception of GPS signals, filed for Chapter 11 bankruptcy protection today.

In a statement, the company made clear that it is not giving up, but buying time.  “The voluntary Chapter 11 bankruptcy filing is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build” the mobile broadband system, said Marc Montagner, interim co-chief operating officer and chief financial officer.

The company’s chief executive officer (CEO), Sanjiv Ahuja, resigned earlier this year after the Federal Communications Commission (FCC) revoked its provisional approval for the company to proceed with its system because of concern that its terrestrial transmissions would interfere with reception of GPS signals.   LightSquared has a satellite in orbit already, SkyTerra, and its signals are not the problem.   Instead, it is LightSquared’s proposal to build 40,000 terrestrial cell towers to work in conjunction with the satellite to provide nationwide mobile 4G broadband services that has created considerable consternation.  A series of congressional hearings by a variety of committees showcased witness after witness from the government, industry and trade groups raising alarms against allowing LightSquared to proceed.

LightSquared insists that it followed all the FCC regulations and any interference is because GPS receiver manufacturers did not properly design their equipment.  The company claims that tests conducted by the government’s National Telecommunications and Information Administration (NTIA) were flawed.   NTIA oversees the use of the radio frequency spectrum by government users, while the FCC regulates private sector use of spectrum.

The company’s statement today said that its current management team would remain in place.  Although Ahuja resigned as CEO, he is still chairman of the board.   Hedge fund manager Philip Falcone of Harbinger Capital Partners is the biggest investor in the company and a member of the board.