Ligado Networks LLC, a satellite communications company currently under Chapter 11 bankruptcy protection, has filed a lawsuit against its contractual partner, Inmarsat Global Ltd., seeking to recover up to $1.7 billion in payments under a 2007 spectrum leasing agreement. The lawsuit was filed Tuesday in the U.S. Bankruptcy Court for the District of Delaware.
Ligado, which filed for bankruptcy late Sunday, claims that Inmarsat violated the terms of the 2007 agreement designed to coordinate both companies’ use of valuable radio frequencies for mobile communications and other commercial services. According to the complaint, the UK-based satellite telecommunications company failed to meet its obligations to upgrade its satellite terminals, which are crucial for the operation of land-based cellular towers that Ligado planned to deploy to supplement its satellite services.
Ligado argues that the satellite giant’s failure to make required upgrades to its satellite network led to significant financial losses for Ligado, preventing the company from monetizing the leased spectrum as originally intended. The lawsuit further asserts that Inmarsat continued to demand payments from Ligado even after a major dispute with the U.S. government stalled Ligado’s expansion plans.
The dispute centers around the L Band spectrum, which Ligado intended to use for land-based 5G wireless services. However, the U.S. Department of Defense (DOD) blocked Ligado’s proposal, citing concerns that the company’s use of the spectrum could interfere with global positioning satellite (GPS) systems. Ligado has filed its own legal challenges against the DOD and other federal agencies regarding this decision.
According to Ligado’s complaint, Inmarsat, which had its own dealings with the DOD, was well aware of the government’s position on the issue. Despite this knowledge, Inmarsat allegedly continued to press Ligado for payments, compounding the company’s financial difficulties.
Inmarsat has denied the allegations, with a company spokesperson stating that the complaint lacks legal merit and is filled with “unfounded allegations.” At a court hearing on Tuesday, Inmarsat’s attorney, Laura Davis Jones, argued that Ligado was $500 million behind on its lease payments, with additional obligations continuing to accrue. She emphasized that Inmarsat had not been paid for years.
The matter was heard before U.S. Bankruptcy Judge Thomas Horan, who is overseeing Ligado’s Chapter 11 restructuring. Judge Horan granted approval for Ligado to take preliminary steps in its restructuring process, including paying employee wages and accessing additional financing from its existing lenders.
Ligado’s bankruptcy filing comes as part of an effort to reduce its $7.8 billion debt. If its restructuring plan is approved, it could significantly alter the company’s financial trajectory. However, the ongoing legal battle with Inmarsat adds another layer of complexity to Ligado’s efforts to regain financial stability.
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