Ill-fated global satellite radio venture WorldSpace is to finally go bankrupt. Having originally filed for Chapter 11 bankruptcy protection back in 2008, the company is now seeking to convert the case into Chapter 7, the process of liquidation under…
Ill-fated global satellite radio venture WorldSpace is to finally go bankrupt. Having originally filed for Chapter 11 bankruptcy protection back in 2008, the company is now seeking to convert the case into Chapter 7, the process of liquidation under bankruptcy laws.
In its filing to the Delaware bankruptcy court, WorldSpace said that it does not have enough cash remaining to fund its administrative expenses. The company stated: “The Debtors do not believe that they will be able to propose or confirm a plan in these cases, and are incurring administrative expenses. Based on these circumstances, the Debtors request that the Court grant the Motion to convert these cases as soon as possible.”
In response, the bankruptcy court scheduled a 6 June 2012 hearing on the matter.
WorldSpace’s filing for bankruptcy protection in October 2008 and the subsequent sale of its assets to Yami USA, an investment vehicle owned and controlled by WorldSpace founder Noah Samara, in mid-2010 has caused plenty of controversy.
In its Chapter 11 filing, the company claimed that it had assets of around US$300m, mainly consisting of its ageing Afristar and Asiastar satellites that it optimistically valued at US$272m, and liabilities of more than US$2bn. However, when the asset sale with Yami USA was finally agreed, Samara’s company paid only US$5.5m. This led to a flurry of complaints from investors and creditors over the way bankruptcy process was managed.
There have also been a number of Class Action lawsuits filed against the company, both before and after the Chapter 11 process, predominantly focussed on claims that Samara deceived investors over the commercial success of the company.
