Iridium has filed for bankruptcy protection after defaulting on a $800 million loan, following the expiration of a senior secure credit facility on Thursday.
The satellite communications operator promised the move would not interrupt its global service, and Motorola, the company's largest investor, said it was confident Iridium would come up with a restructuring plan within 30 days.
While the operator had expected to add 50,000 customers a month this year, by the end of the first quarter it managed only 10,000, which was a violation of its credit requirements.
Iridium was touted as the world's first global satellite phone and paging company when it was launched on 1 November last year, following a number of technical problems.
But the service was soon criticised for being too expensive, with some calls costing between $3-7 a minute and handsets going for several thousands of dollars.
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