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

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.