BANGALORE, July 29 (Reuters) - Satellite services operator ProtoStar Ltd filed for bankruptcy protection along with its five affiliates on Wednesday and said it was looking to sell its satellites through a court-supervised auction.
The Bermuda-based company, which has two satellites, said its lenders support the restructuring plan and had agreed to provide debtor-in-possession (DIP) financing. Companies rely on DIP financing to fund operations while in bankruptcy.
The company was formed in 2005 to launch and operate high-power geostationary satellites to lease capacity to Asian direct-to-home (DTH) satellite television and broadband service providers.
The company said in court documents that in March, Agrani Satellite Services Ltd, which had agreed to lease capacity on ProtoStar's first satellite, terminated the contract. Protostar said it disputes the validity of the termination notice.
Court documents show that ProtoStar's working-capital lenders declared an event of default in April and were soon followed by other secured lenders.
The company, which employs about 22 people, listed assets and liabilities in the range of $100 million to $500 million in its Chapter 11 filing.
It lists Philippine Long Distance Telephone Co (PLDT) (TEL.PS), to which it owes $27.5 million, as its largest unsecured creditor.
The case is In re: ProtoStar Satellite Systems Inc, U.S. Bankruptcy Court, District of Delaware (Delaware), No.09-12658. (Editing by Gopakumar Warrier, Vinu Pilakkott)
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