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Satellite phone carrier TerreStar declares bankruptcy

updated 10:10 am EDT, Wed October 20, 2010

TerreStar files for Chapter 11 bankruptcy

As expected, satellite phone maker and carrier TerreStar Networks has filed for Chapter 11 bankruptcy, according to a Tuesday report. The company and 12 of its affiliates had more than $1 billion of liabilities, with $1.4 billion of assets and $1.64 billion of liabilities as of June 30. TerreStar's largest secured creditor, satellite TV provider EchoStar, will help TerreStar with $75 million of operating capital to keep it working through the bankruptcy.

EchoStar will also support a debt-for-equity restructuring and $100 million rights offering to help it safely exit Chapter 11 protection.

TerreStar launched its first satellite, TerreStar-1, in July 2009, and has been building a second, TerreStar-2. In September, it launched the Genus satellite smartphone at AT&T. Such devices have usually found acceptance difficult since they carry an access premium over regular cellphones and are mostly useful in remote areas where no cell service exists.

by MacNN Staff



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