LightSquared Inches Closer to Bankruptcy

The broadband start-up owes $56 million to U.K.-based satellite operator and spectrum owner Inmarsat. LightSquared, however, is defending its place in the dispute with the Inmarsat, saying the agreement between the two sides is multi-phased and the lender has not fulfilled all of its obligations to receive payment.

"LightSquared has raised several matters that require resolution before the first phase comes to a close", according to LightSquared's statement. "The terms of the agreement allow for additional time to resolve pending questions before phase one is complete and the final payment is due".

LightSquared went on to say the company is still committed to fulfilling its business plan to "bring world-class wireless broadband connectivity to millions of Americans", and the company believes Inmarsat will still be a part of that goal.

Although LightSquared is publicly saying it will continue with its plans for a new network, the company has hit a rough patch in its efforts to become a wholesale high-speed wireless player in the market. The Federal Communications Commission rejected LightSquared's broadband network plan, bringing its multi-billion dollar deal with Sprint to a screeching halt and leaving the company financially vulnerable as analysts forecast bankruptcy.

One option is for LightSquared to go back to the drawing board and come to the FCC with a new plan for a wireless network. That will be challenging since the company can't use satellite-phone transmission networks to build out spectrum without triggering issues with surrounding GPS signals, a concern which brought down its original plans.

And, even if LightSquared did come up with a resolution addressing the FCC's concerns, the company will unlikely salvage its deal with Sprint, a cornerstone in its financial plans.

LightSquared may be able to buy itself time in its payment dilemma with Inmarsat, but unless the company can launch a new plan quickly, it will eventually be forced to pay the debt. Unfortunately, LightSquared may not be able to pay Inmarsat and still stay afloat, leaving the company with limited options.