Iridium pulled the plug on its satellite phone network at midnight US east coast time on Friday because a suitable buyer had not been found.
The company was understood to have been in late talks with three possible rescuers - including Gene Curcio, owner of US-based telecoms company Crescent Communications - after filing for bankruptcy last October.
But Motorola, Iridium's largest investor, reportedly dismissed Curcio's request for the mobile phone giant to continue operating its satellites for another 60 to 90 days.
A US bankruptcy court had given Iridium until 17 March to find a buyer, following the withdrawal earlier this month of a $74.6m rescue package by mobile telecoms pioneer Craig McCaw and his Eagle River investment firm. The New York bankruptcy court also approved a new financing plan, which provided Iridium with an additional $3m from lenders.
In a statement, Motorola company chiefs said: "Motorola is extremely disappointed that Iridium has not succeeded in its effort to emerge from voluntary bankruptcy."
"Motorola and other Iridium investors have worked hard to support Iridium efforts to reorganise and continue operating the business. Unfortunately, that has not happened.".
As a result, Iridium is expected to begin removing its 66 satellites from orbit at midnight. The process will take up to nine months and cost between $30m and $50m. It will take a further one to two years for the satellites to burn up in the atmosphere.
Until then, Motorola said it would continue to work with subscribers in remote locations to obtain alternative communications, although this would depend on whether individual gateway companies remained open for business.
Iridium was touted as the world's first global satellite phone and paging operator when it was launched on 1 November 1998. But the service was plagued by a number of technical problems and was criticised for being too expensive.
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