Ligado Networks has filed for Chapter 11 bankruptcy as part of restructuring plans, noting that the company will still continue to operate and provide mobile satellite services as normal.
The company said that the filing will enable it to reduce its debt from $8.6 billion to approximately $1.2 billion.
Ligado said it has secured a restructuring support agreement with 88 percent of its existing creditors.
A key part of the restructuring includes a commercial agreement with AST SpaceMobile, for which AST SpaceMobile will provide Ligado, subject to certain conditions precedent, with approximately $113 million of AST SpaceMobile warrants, and usage rights payments to fund Ligado’s payments under certain spectrum agreements.
The agreement will also see Ligado receive economic participation in AST SpaceMobile’s direct-to-device business in the US and Canada.
In exchange, AST SpaceMobile obtains usage rights to Ligado’s L-Band mobile satellite services (MSS) spectrum.
AST SpaceMobile notes that Ligado will receive AST SpaceMobile warrants plus a $550 million payment, then around $80 million annually for spectrum usage rights, set to last for 80 years.
“This restructuring allows us to concentrate on our ongoing value-maximizing daily work and other key initiatives for the benefit of all of our stakeholders,” said Doug Smith, president and chief executive officer of Ligado.
Ligado lays blame on the government
In the company's announcement this week, Ligado blamed its bankruptcy filing on large operational losses that it says are because of the US government.
Ligado blames the US government for taking its licensed spectrum unlawfully without compensation after a year-long effort to secure a comprehensive resolution with satellite communications company Viasat to restructure Ligado’s significant payment obligations to Inmarsat. Viasat acquired Inmarsat in 2023.
“Ligado will continue to vigorously prosecute its litigation against the US government to enforce its constitutional right to just compensation for the government’s unlawful taking of Ligado’s licensed L-Band spectrum,” added Smith.
The company stated that the Chapter 11 filing will enable it to pursue its lawsuit against the US government, which it filed in 2023 against the Department of Defense (DoD), the Department of Commerce (DOC), and the National Telecommunications and Information Administration (NTIA).
In 2020, the Federal Communications Commission (FCC) granted Ligado exclusive rights to operate terrestrial 5G services within its licensed L-Band spectrum.
Ligado said that because of this, it raised billions of dollars to expand its network, hired employees, and invested in technology to prepare its spectrum to support next-generation terrestrial 5G services. After which, it claims the DoD unilaterally seized its licensed spectrum, meaning it was unable to achieve its 5G ambitions.
The company's lawsuit seeks compensation for the spectrum it has been unable to use.
Ligado's filing isn't the first in the company's history. Initially founded in 2010 as LightSquared, the firm entered bankruptcy two years later after its proposed terrestrial 4G LTE network with its L-band spectrum holdings was rejected by the FCC. The company was then reborn in 2015 as Ligado, with the goal of pushing terrestrial 5G instead.