For LightSquared’s part, it is trying to reduce its costs while it tries to get the necessary approvals. The company recently announced it is laying off roughly half of its 330-member staff. Getting approval will be tricky – several government entities, including the Space-Based Positioning, Navigation and Timing National Executive Committee, have recommended against LightSquared’s technology – and the company has already defaulted on some of its debt obligations. Reuters reports that “LightSquared’s creditors, which include hedge funds led by Carl Icahn and David Tepper, are weighing whether to declare the company to be in default on a $1.6 billion loan.” With all this going on, LightSquared is sort of a sinking ship.
Falcone recently said that filing for bankruptcy is one of the options he is considering for LightSquared. Falcone explained that “a bankruptcy would allow the company time to find a way to deal with communications interference issues that have arisen with the planned buildout of a nationwide wireless broadband network,” according to Reuters. “Falcone said a bankruptcy would not necessarily wipe out the equity holders of LightSquared because the spectrum it owns retains value.” Creditors have told Falcone that he has until the end of the month to make a deal or the company could be forced into bankruptcy. “Falcone said he is telling his hedge fund investors that all is not lost,” says Reuters. “He is confident the value of LightSquared’s operating spectrum will rise again once it is able to come up with a plan for resolving the interference issues.”
