Iridium said today it will shut down the Japanese arm of its satellite mobile phone service on Saturday, only a day after its delayed bankruptcy hearing.
The company was supposed to provide the US Bankruptcy Court for the Southern District of New York either with the name of a buyer or plans to dismantle its $5bn (£3bn) satellite phone network by Tuesday this week, but Judge Cornelius Blackshear rescheduled the hearing because of personal reasons.
The situation follows Iridium's decision to file for Chapter 11 bankruptcy protection last August after the project failed to attract enough customers. While mobile phone entrepreneur Craig McCaw and his Eagle River investment house pulled out of a bid to purchase the company last month, Iridium later secured $3m in financing from lenders to keep it afloat until 17 March.
Although investors and analysts have said they do not expect the company to receive a last-minute offer for its assets and believe it will be shut down by the end of this week, Crescent Communications is thought to be preparing a bid. Defence system supplier General Dynamics has also tentatively agreed to help operate Iridium's satellites and ground stations if the bid is successful.
Bondholders have also been granted permission by the court to sue Motorola, Iridium's largest single investor, for more than $2bn. They allege that the mobile phone giant extracted more than $1bn from the firm after it became insolvent.
Motorola said it will wait for the outcome of the court hearing on Friday before it decides how to proceed. If no buyer is found, it plans to discontinue Iridium's service that day and will dismantle its satellite network.
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