If the courts approve the plan, Motient will eliminate more than $40 million in annual interest payments
Wireless network operator Motient Corp. announced on Thursday that it has filed for Chapter 11 bankruptcy and has arranged debt restructuring plans with its creditors.
If the courts approve the plan, Motient will eliminate more than $40 million in annual interest payments, said officials at the Reston, Va., company.
"This restructuring allows Motient to proactively eliminate substantially all of its debt and to significantly improve our ability to achieve EBITDA break even later this year," said Walter V. Purnell, Jr., president and CEO of Motient, in a statement. "Even more significant, the restructuring will not affect the operations of our nationwide wireless data network, our customers or our employees."
Motient provides one of the networks that Research in Motion Ltd. uses to support its RIM Blackberry devices, but RIM officials said they were not concerned that Chapter 11 bankruptcy might be a death knell for the network.
"I think its good news for us. Theyve announced a plan for financial restructuring," said Mark Guibert, vice president of brand management at RIM in Toronto, Canada. "Chapter 11 is really just a financial instrument that has dramatic overtones. They have a plan for how theyre going to structure themselves."
But wireless data network providers and Internet service providers have been facing hard times. Metricom Inc. filed for bankruptcy last July and then shut down its service in August.
In December, OmniSky Corp. and Arch Wireless Holdings Inc. filed for bankruptcy, and YadaYada Inc. went out of business.