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Company with big plans files for Chapter 11 bankruptcy protection

A company that was started with dreams of becoming a national wireless carrier filed for Chapter 11 bankruptcy recently, hoping to buy time to get its financial obligations in order and continue toward those lofty goals. Business owners in Escondido may be interested to hear of how the business intends to buy time for restructuring.

LightSquared, a Virginia-based company, had hoped to compete with other major wireless players such as AT&T and Verizon in providing customers with data and wireless phone and Internet services. Company executives are claiming that the Chapter 11 bankruptcy filing is merely a temporary strategy to keep their creditors from pressuring them to turn around a quick profit.

In the bankruptcy paperwork, which was filed in Manhattan, the company listed assets of nearly $4.48 billion and liabilities of approximately $2.29 billion. LightSquared owns the rights to use of a large amount of the wireless spectrum, but the company was unable to initiate plans to open the network due to a failure to meet some key regulatory requirements.

The recent reports seem to indicate that the company will attempt to work through its regulatory issues while continuing to operate with the goal of becoming a nationwide wireless provider.

With Chapter 11 bankruptcy, the primary intent is to remain in operation while submitting a business reorganization plan to streamline the overall business model and pay creditors over time. And time seems to be exactly what LightSquared needs to overcome its financial difficulties.

Business owners in California who are faced with financial pressure from creditors may want to consider the advantages of Chapter 11 bankruptcy protection. Filing for bankruptcy doesn't always mean it's the end of a business -- companies can emerge from the process on a direct line to profitability.

Source: CNN Money, "LightSquared files for bankruptcy," David Goldman, May 14, 2012

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