LightSquared, the wireless startup that has run into opposition from federal regulators, filed for Chapter 11 bankruptcy on Monday.
Philip Falcone and his investment firm Harbinger Capital invested billions of dollars in LightSquared's plan to build a high-speed wireless network that would have served more than 260 million people, but federal regulators denied it permission to launch earlier this year.
In a statement, Marc Montagner, the company's chief financial officer, said the filing "is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network."
The agency determined there was no "practical way" to solve the interference problem.
In its bankruptcy filing, LightSquared identified its biggest creditors as Boeing, which it owes $7.5 million, and Alcatel-Lucent, which it owes $7.3 million.
The company also owes thousands of dollars to public relations firm Burson-Marsteller and the lobbying group Mehlman Capitol Strategies, according to the Chapter 11 filing.
Testing showed that LightSquared's signal did not bleed into the GPS band. Instead, the problem was that GPS receivers were too sensitive to filter out LightSquared's powerful cell towers operating on nearby frequencies.
LightSquared argued that it was the GPS industry's responsibility to build receivers that only listened to their own designated frequencies, but GPS companies argued that LightSquared was trying to build a cellphone network relying on frequencies that should only be used by satellites, which transmit much fainter signals.
Some Republicans have questioned why the FCC allowed LightSquared to get as far as it did in the regulatory process. They have suggested the company may have benefitted from political connections at the FCC and the White House.
Republicans on the House Energy and Commerce Committee have launched an investigation into the FCC's review of LightSquared.
Sen. Chuck GrassleyChuck GrassleyGOP senator: Trump budget chief could face confirmation 'problems' Jeff Sessions will protect life Justice, FBI to be investigated over Clinton probes MORE (R-Iowa) held up President Obama's two FCC nominees for more than 4 months to force the agency to turn over internal documents on its review of the company.
The White House and the FCC deny giving any special treatment to LightSquared, but expanding broadband access has been a top priority for both agencies.
Last September, Rep. Michele BachmannMichele BachmannEx-rep admires furs amid PETA inaugural gala Why Republicans took aim at an ethics watchdog Will Trump back women’s museum? MORE (R-Minn.) accused President Obama of "crony capitalism" for allegedly giving favor to his political supporters, pointing to billionaire Philip Falcone.
Falcone, who has donated thousands of dollars to both Democrats and Republicans in recent years, says he is a registered Republican and has denied any attempts to influence the process through political connections.
LightSquared did turn to K Street, however, as it battled for regulatory approval.
The wireless group had contracts with three lobby firms in the first quarter of 2010, compared to 14 by early 2012. It spent $695,000 on K Street in 2010, compared to nearly $2.8 million in 2011.
LightSquared’s lobbying line-up has been star-studded, thanks to contracts with firms that employ influential former lawmakers. Former congressman Dick Gephardt (D-Mo.) and former Pennsylvania Gov. Ed Rendell (D) are among those who have lobbied for LightSquared.
The K Street blitz has continued in 2012. The now-bankrupt company spent more than $1 million during the first three months of this year on 14 lobbying powerhouses, public disclosures show. Only two of those 14 firms disclosed terminating their contracts with LightSquared in the first quarter of this year despite the firm’s financial woes.