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In a dramatic courtroom twist with orbit-shifting implications, a Delaware bankruptcy judge on Monday greenlit Ligado Networks’ $550 million partnership with AST SpaceMobile, signaling a breakthrough in the satellite firm’s audacious quest to slash nearly $8 billion in debt and launch a new era of space-based broadband connectivity.

The greenlight from U.S. Bankruptcy Judge Thomas M. Horan allows Ligado to formally enter into a sweeping commercial agreement with AST, paving the way for AST to use Ligado’s L-band spectrum in building out next-gen satellite internet infrastructure. As part of the deal, Ligado will receive 17.5% of future revenue generated from the spectrum-sharing arrangement.

“The Inmarsat agreement is integral to the resolution of the issues with AST,” Judge Horan said, declaring, “I’m going to grant the motion today.”

$550M Infusion Unlocks Reorganization Blueprint

The ruling caps weeks of legal wrangling and unlocks a $550 million payment from AST to Ligado, which will be used to resolve fierce opposition from Viasat Inc.'s unit, Inmarsat Global Ltd., a former bandwidth partner of Ligado. Inmarsat had previously alleged that the AST partnership unlawfully assigned rights under their existing cooperation agreement—an assertion now quelled by the hefty payout.

The transaction, unveiled in January alongside Ligado’s Chapter 11 filing, is described by the debtor as “a cornerstone” of its reorganization strategy, enabling low-earth orbit satellite integration with its mid-band L-band spectrum.

In addition to quarterly payments and penny warrants for 4.7 million AST shares, the deal positions Ligado to benefit directly from AST’s satellite broadband ambitions while navigating the wreckage of its overleveraged balance sheet.

Disclosure Statement and Vote Cleared for Lift-Off

Judge Horan also approved Ligado’s disclosure statement and voting procedures, enabling creditors to vote on the Chapter 11 plan, which proposes converting $7.8 billion in debt into equity.

The plan notably preserves Ligado’s ongoing $40 billion lawsuit against the U.S. government, where the company claims unlawful spectrum takings by the Departments of Commerce and Defense. That litigation, focused on the government's alleged interference with Ligado’s L-band 5G license, remains a significant asset in the restructuring.

The Fall and Rise of Ligado's Spectrum Empire

Reston, Virginia-based Ligado Networks had once aspired to pioneer L-band 5G terrestrial infrastructure, leveraging a controversial 2020 license from the Federal Communications Commission. But friction with federal agencies citing GPS interference concerns stalled its momentum and triggered a cascade of financial collapse.

In 2023, Ligado filed suit against the federal government, and in January 2024, it sought bankruptcy protection. The reorganization now hinges on its deal with AST and potential windfalls from its constitutional claims.

Ligado CEO Douglas Smith previously told the court the company had invested “billions” in the network, only to face headwinds from government opposition.

Who's Behind the Legal Battle?

For Ligado (Debtor):

• Milbank LLP: Dennis F. Dunne, Matthew L. Brod, Lauren C. Doyle, Andrew M. Leblanc

• Richards Layton & Finger PA: Mark D. Collins, Michael J. Merchant, Amanda R. Steele, and others

For Inmarsat (Creditor):

• Pachulski Stang Ziehl & Jones LLP: Laura Davis Jones, Timothy P. Cairns

• Quinn Emanuel Urquhart & Sullivan LLP: Benjamin Finestone, Matthew Scheck

• Steptoe LLP: Jeffrey M. Reisner, Charles Michael, Alfred M. Mamlet