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Philip Falcone to step down from LightSquared leadership

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Philip Falcone will eventually step down from the leadership of LightSquared, in an attempt to pacify the company's creditors.

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Cell tower 1024 stock

LightSquared's CEO Philip Falcone will "eventually" step aside as the public face of the company, the Wall Street Journal reports. The move follows months of setbacks for the wireless broadband provider, and is being suggested as a concession that could allow the firm to renegotiate terms with its lenders and prevent it from entering bankruptcy. However, the WSJ quotes a person close to the company as saying that a final agreement may not be reached, and it was still possible that the company would be forced to default on its debts.

As part of the agreement, Falcone would not be able to act as an officer of the firm, and would eventually step down as a director of LightSquared entirely. Falcone himself has said that his role leading the firm was always intended to be temporary. However, there is pressure upon LightSquared to become a "bankruptcy-remote" company, where LightSquared would be restructured in order to prevent it from filing for Chapter 11 bankruptcy protection and in turn protect its creditors. There is also talk of the installation of a director that could block any vote on bankruptcy, or even the shifting of the liability of the debt onto Falcone himself, though he hasn't yet agreed to either of these terms.

The loss of confidence in the firm comes after the FCC rejected LightSquared's application for a spectrum license over concerns that it would interfere with GPS signals, which in turn led to the loss of its largest customer, Sprint.