WorldSpace, Inc., a satellite-based radio provider to countries in Europe, India, the Middle East and Africa, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on October 16, 2008. As reflected in WorldSpace’s Declaration in Support of First Day Motions, the Debtor is based in Silver Spring, Maryland and owns two satellites that orbit over Asia and Africa, with a third satellite yet to be launched. Prior to filing bankruptcy, WorldSpace intended to expand service to Italy, Bahrain, the United Arab Emirates, Germany and Switzerland. WorldSpace’s bankruptcy proceeding is before Judge Peter J. Walsh.
Events Leading Up to WorldSpace’s Bankruptcy Filing
Between July and September of 2008, WorldSpace entered into four forbearance agreements with its senior secured note holders. After the fourth forbearance period, WorldSpace began discussions with interested purchasers and investors who could assist WorldSpace with its obligations to note holders. Concerned over its ability to pay employees and critical vendors, WorldSpace filed for bankruptcy.
Total assets ….. $307,382,000.00
Total debts ….. $2,122,904,000.00 (according to Debtors’ petition, the listed debt amount includes a $1.8 billion contingency under a royalty agreement).
Debtor In Possession
Financing ….. $13,000,000.00 (proposed)
Objectives in Bankruptcy
WorldSpace and its note holders began negotiations for debtor in possession financing
before it filed for bankruptcy. If the debtor in possession financing is approved, WorldSpace hopes that the loan will provide enough liquidity to find a buyer for its assets. Many of WorldSpace’s employees have gone without pay for months. Weeks prior to filing for bankruptcy, insiders of WorldSpace had to lend the Debtor money to pay some of its expenses.
WorldSpace’s bankruptcy counsel includes Shearman & Sterling LLP in New York, and Pachulski Stang Ziehl & Jones LLP in Delaware.