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Troubled wireless-startup LightSquared filed for bankruptcy Monday, according to documents filed with the U.S. Bankruptcy Court in Manhattan.

LightSquared listed debt and assets of over $1 billion in the documents. The company filed under Chapter 11 bankruptcy, which allows it to continue operating without having to pay debt owed to creditors. The company previously tried and failed to negotiate with its lenders for an extension of time for repaying its massive debt, with LightSquared founder Philip Falcone even agreeing to step back.

LightSquared’s business strategy involved building out a high-speed wireless network that would generate revenue by selling network access to outside companies, such as Walmart, Best Buy, and others. But over the last several months, the company has run into many problems.

Those problems began in February, after the Federal Communications Commission (FCC) rejected LightSquared’s plans to launch its LTE network due to concerns that it would interfere with both commercial and military GPS technology. Because of this development, Leap Wireless has decided to buy future LTE connectivity for its Cricket prepaid service from Clearwire, another troubled wireless company (of which Sprint is the largest stakeholder). Earlier this year, LightSquared client FreedomPop also decided to go with Clearwire. But by far the biggest setback for LightSquared came in March after its $9 billion 15-year agreement with Sprint-Nextel to build and host its LTE network fell through.

Falcone’s New York-based hedge fund Harbinger Capital Partners has invested about $3 billion in LightSquared to date, and stands to lose the most if the company ends up completely dying. LightSquared still owns a valuable portion of spectrum, which it can sell off off to recuperate some of those losses.

Via Bloomberg


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