But this doesn’t mean the company will close down, fire all its employees and have a big, yard-sale type auction of all its possessions. Far from it. Chapter 11 is a useful process for companies in financial difficulties, in that it gives them protection from creditors while they seek ways to get things back to a reasonably normal state. And that recovery process can take several months, during which time the company’s management remains in exclusive control to take whatever actions it wishes before requesting its emergence from Chapter 11.
As Philip Falcone, billionaire owner of LightSquared’s parent, Harbinger Capital Partners–he reportedly has more than $2 billion of his own money invested in LightSquared–put it, “Today’s filing was not an option the company embraced quickly or easily, but it was necessary to protect LightSquared against creditors who were looking for a quick profit, as opposed to our goal to create long-term market competition, [jobs] and the promise of wireless connectivity for every American.”
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