By Dietrich Knauth

Jan 30 (Reuters) - Satellite communications company Ligado Networks is trying to finance its bankruptcy with a high-fee loan that would eat up $100 million that could otherwise be used to repay creditors, according to an objection filed by fellow satellite company Inmarsat.

Inmarsat said in a Wednesday court filing in Delaware that the company's existing lenders are only providing $115 million in new money to Ligado, while the rest of the bankruptcy loan merely refinances its existing debts. The loan adds nearly $100 million in new fees, almost entirely “eating up” the new money and reducing the chance that Ligado’s other creditors, including Inmarsat, will be paid, according to the objection.

Ligado filed for bankruptcy protection earlier this month, seeking to eliminate $7.8 billion in debt and solidify a new spectrum-sharing partnership with satellite-to-phone company AST SpaceMobile. Ligado intends to fund its bankruptcy with a loan provided by the existing lenders, which include Fortress Investment Group and Cerberus Capital Management.

Ligado and Inmarsat have recently sparred over the terms of a 99-year spectrum leasing agreement meant to coordinate the two companies' use of in-demand radio frequencies for mobile communications and other commercial uses.

Inmarsat says that Ligado owes over $500 million under the spectrum sharing agreement, while Ligado sued Inmarsat for demanding payment while allegedly failing to hold up its end of the agreement.

In Wednesday’s objection, Inmarsat accused Ligado of selectively paying off some of its debts before bankruptcy to avoid the oversight that a court-appointed creditors committee would provide. The Department of Justice’s bankruptcy watchdog, the Office of the U.S. Trustee, on Jan. 16 informed U.S. Bankruptcy Judge Thomas Horan, who is overseeing the bankruptcy, that no creditors’ committee would be formed due to “insufficient response” from Ligado’s creditors.

Ligado did not immediately respond to a request for comment. It has said in previous court filings that the bankruptcy loan was the best financing available at the time that it decided to file for Chapter 11 protection.

Horan will consider approving Ligado’s bankruptcy loan at a court hearing next week.

Ligado has blamed its bankruptcy on the U.S. government’s alleged interference with its planned expansion of its mobile 5G network services into a new spectrum that uses lower frequency radio waves.

The company received a U.S. Federal Communications Commission permit to access the new spectrum in 2020, but the U.S. Department of Defense later blocked the planned expansion over concerns that Ligado's wireless signals could disrupt military global positioning system $(GPS.AU)$ receivers, it has said.

Ligado sued the Defense Department and other U.S. agencies over its access to additional spectrum in 2023, saying that the government's actions deprived it of up to $39 billion in potential earnings from the FCC license. That lawsuit is proceeding in a federal court in Washington D.C.

Ligado, formerly known as Lightsquared, previously filed for bankruptcy in 2012.

In re: Ligado Networks LLC et al, U.S. Bankruptcy Court for the District of Delaware, No. 25-10006

For Ligado: Andrew Leblanc of Milbank

For Inmarsat: Laura Davis Jones of Pachulski Stang Ziehl & Jones

Read more:

Ligado files for bankruptcy after stalled wireless expansion

Satellite operator Ligado sues Inmarsat after bankruptcy filing

Pentagon warns of GPS interference from Ligado broadband network

(Reporting by Dietrich Knauth)