LightSquared Inc., a Reston, Va.-based high-speed wireless company that planned to compete with Verizon and AT&T, filed for Chapter 11 bankruptcy protection today, the New York Times reported. The company filed for bankruptcy after failing to reach an agreement with its creditors on restructuring its debt.
The bankruptcy wipes out most of the $2.9 billion that hedge fund Harbinger Capital Partners had invested in the company, the Street reported.
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LightSquared’s plan to provide wireless service to 260 million users via airwaves originally reserved for satellite service ran into trouble in February when the Federal Communications Commission, which regulates wireless networks, said it would withdraw its preliminary approval for LightSquared’s network, Bloomberg News reported.
A coalition of global-positioning system users and providers, including FedEx Corp., United Parcel Service, Garmin Ltd. and Deere & Co., had lobbied the government to block the network on fears that it would interfere with their signals, Bloomberg News reported. In Dec. 2011, government tests indicated that LightSquared signals interfered with about 75 percent of GPS receivers, which are used by airlines, the military and companies.
Following the FCC’s decision, companies like Sprint and Leap Wireless exited their partnerships with LightSquared, the Street reported.
LightSquared owes $17 million to creditors, including $7.5 million to Boeing and $7.4 million to Alcatel-Lucent, the New York Times reported.
The company declared more than $1 billion in assets and debt in its bankruptcy filing, the Street reported.
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