Satellite communications company Ligado Networks LLC has filed a detailed disclosure statement outlining its plan to emerge from bankruptcy by eliminating all of its existing funded debt and entering into a critical transaction with AST SpaceMobile that would monetize its valuable spectrum assets.
The disclosure statement, filed on June 13 with the U.S. Bankruptcy Court for the District of Delaware, reveals Ligado's strategy for recapitalizing its approximately $8.6 billion debt burden while continuing to pursue a high-stakes lawsuit against the U.S. government for alleged "taking" of its spectrum rights.
"The Debtors filed these Chapter 11 Cases to take advantage of the breathing spell afforded by chapter 11 to pursue their lawsuit against the U.S. Government to obtain just compensation for the taking of the spectrum that the FCC granted exclusively to them for terrestrial use," the company stated in the filing.
Ligado, which operates a satellite network providing mobile satellite services (MSS) to government and commercial customers, filed for Chapter 11 protection on January 5, 2025, after years of regulatory battles and financial challenges. The company's reorganization plan has garnered substantial support from its creditors, with holders of approximately 93.3% of its First Out Term Loans, 86.9% of First Lien Notes, and 96.9% of its 1.5 Lien Facility backing the restructuring.
AST Transaction Central to Reorganization
At the heart of Ligado's restructuring is a transaction with AST SpaceMobile, which will provide AST with usage rights to Ligado's L-band MSS spectrum in exchange for warrants, convertible notes and/or cash payments, annual usage-right payments, and a percentage of revenues derived from AST's use of the spectrum.
"The Debtors and the Consenting Stakeholders believe that the AST Transaction, together with the recapitalization provided for in the RSA, represents a value maximizing transaction that benefits all stakeholders," the disclosure statement notes.
The transaction requires regulatory approvals from the Federal Communications Commission (FCC) and Innovation, Science & Economic Development Canada (ISED), adding complexity to the restructuring timeline.
Debt-for-Equity Swap and New Capital Structure
Under the proposed plan, Ligado's funded debt would be substantially reduced through a series of debt-for-equity conversions:
- Holders of First Lien Claims (approximately $5.5 billion) would receive New Series A-1 Preferred Units
- Holders of 1.5 Lien Claims (approximately $591.5 million) would receive New Series A-2 Preferred Units
- Holders of Second Lien Notes Claims (approximately $2.05 billion) would receive New Series A-3 Preferred Units
- General Unsecured Claims would be paid in full
The plan contemplates an Exit First Lien Facility of approximately $2.7 billion, which would consist of a cashless roll-up of the company's DIP loans.
Government Lawsuit Could Provide Additional Recovery
Ligado's reorganization is unusual for its focus on a significant lawsuit against the U.S. government. In October 2023, the company filed suit against the United States, the Department of Defense (DOD), the Department of Commerce (DOC), and the National Telecommunications and Information Administration (NTIA) in the U.S. Court of Federal Claims.
The lawsuit alleges that despite the FCC's unanimous approval in April 2020 of Ligado's license to use its L-Band spectrum for terrestrial communications, the DOD and DOC have effectively blocked the company from utilizing its spectrum assets. Ligado claims the DOD has been using its spectrum without compensation and has undertaken a campaign to prevent Ligado from deploying its approved services.
"The United States, by enacting the 2021 NDAA, has effected a legislative taking of the Debtors' property rights," the filing states, referring to provisions in the National Defense Authorization Act that restricted the DOD from entering into contracts with entities using Ligado's spectrum.
On November 18, 2024, the Court of Federal Claims denied the government's motion to dismiss in substantial part, ruling that Ligado has alleged viable claims for physical, regulatory, and categorical takings. The case is currently on appeal to the Federal Circuit Court of Appeals, which granted the government's petition for interlocutory appeal on May 20, 2025.
Years of Regulatory Struggles
The disclosure statement details a complex history of regulatory challenges that have prevented Ligado from fully commercializing its spectrum assets. Despite receiving FCC approval in 2020 to use its spectrum for terrestrial 5G services, the company has faced continued opposition from various government entities.
"The actions of the U.S. Government have prevented the Debtors' full use of their L-Band license, costing the Debtors significant time and billions of dollars in sunk costs and lost profits," the filing states.
Ligado also highlights its troubled relationship with Inmarsat, which was acquired by Viasat in 2023. Under a Cooperation Agreement dating back to 2007, Ligado has paid Inmarsat over $1.7 billion but alleges that Inmarsat has failed to fulfill certain obligations that would have facilitated Ligado's spectrum use.
Path Forward and Timeline
The bankruptcy court has scheduled a confirmation hearing for August 7, 2025. Creditors eligible to vote on the plan must submit their ballots by July 24, 2025.
The restructuring support agreement (RSA) that underpins the plan was signed by the company and its key stakeholders on January 5, 2025, coinciding with the bankruptcy filing.
Milbank LLP and Richards, Layton & Finger, P.A. are serving as counsel to the debtors.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 161 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.