LightSquared Files For Bankruptcy

May 14 2012 | 2:14pm ET

LightSquared, Harbinger Capital Management's embattled wireless Internet venture, filed for bankruptcy this afternoon, barring an unlikely last-minute agreement with creditors.

LightSquared's lenders could have declared the company in default on $1.6 billion in loans at 5 p.m., a move the company preempted with the Chapter 11 filing.

That filing was made in U.S. Bankruptcy Court in Manhattan. LightSquared listed debt and assets of more than $1 billion each.

The two sides have been negotiating for months, especially over the past two weeks, after creditors gave LightSquared two one-week extensions. The company has been in breach of covenants on the $1.6 billion in debt since the Federal Communications Commission revoked its preliminary waiver in February, citing concerns over interference with global positioning systems.

A waiver on the covenant violations had an April 30 deadline. The lenders were not expected to offer LightSquared a third extension of the waiver.

LightSquared and Harbinger have been fighting to save the former since the FCC decision. They have appealed that decision and are mulling legal action against the regulator.

The creditors, including Appaloosa Management, Fortress Investment Group and Redwood Capital Management, "are asking for conditions they know Harbinger" and founder Philip Falcone "cannot agree to," according to a media source. Among those conditions are a so-called "bad boy" clause that would make Falcone personally responsible for the debt if he was found to have influenced an eventual bankruptcy filing. But Falcone has balked at that provision alongside an agreement for him to leave LightSquared's board.

An agreement with creditors would have given LightSquared as much as two years to deal with its problems while keeping the company from filing for bankruptcy.

In the event, LightSquared's creditors may have overplayed their hand. Falcone has previously called bankruptcy the "best way" for Harbinger to retain control of LightSquared.


In Depth

Kettera Q&A: The Advantages of Alternative Investment Platforms

Oct 28 2016 | 5:52pm ET

The past several years have seen a distinct push towards easier and cheaper access...

Lifestyle

Midtown's Plaza District Fades As Manhattan Office Landscape Shifts

Nov 22 2016 | 6:32pm ET

Lower leasing costs, more efficient office space and the hope of projecting an image...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR