updated 03:50 pm EDT, Mon October 18, 2010
TerreStar satellite phones may face bankruptcy end
In spite of just releasing its Genus satellite smartphone, Terrestar may already be on the edge of bankruptcy after a scoop today. The company is reportedly in talks with creditors and could file for Chapter 11 bankruptcy as early as Sunday. The WSJ hints that TerreStar would already have a restructuring plan in place and would have both $75 million to last the reorganization and stock sales to help clear the $1 billion in debt.
Share owners would likely lose out on the deal, but it could potentially keep TerreStar's plans alive. Key investor Harbinger had been an early supporter but has switched its attention to building 4G cellular access.
The company was founded with the aim of making satellite-based smartphones and other devices that could get online from virtually any place on Earth, even when cellular access is completely unavailable. Such services have proven expensive to maintain and saw their most well-known advocate, Iridium, go bankrupt in 1999 after it couldn't get enough subscribers.