NEW YORK ( TheStreet) -- Philip Falcone-run hedge fund Harbinger Capital Management has put its multi-billion dollar 4G wireless investment LightSquared into bankruptcy. After crippling regulatory setbacks and multiple extensions with its lenders, LightSquared, a high-speed wireless service that was planned to provide connectivity to 260 million users, was unable to continue negotiating a recovery strategy and has filed for Chapter 11 bankruptcy, a move that will likely wipe out most of Harbinger's near-$3 billion investment. LightSquared listed more than $1 billion in assets and debt in its bankruptcy filing. Earlier on Monday, The Wall Street Journal and Reuters reported that a bankruptcy filing was imminent after negotiations with lenders broke off. While Carl Icahn was the most vocal lender calling for a bankruptcy, reports indicate that the activist investor has dumped his LightSquared stake and won't be a part of the bankruptcy process.
For Falcone, a former professional hockey player, LightSquared's bankruptcy is another giant blow to his fund Harbinger Capital Management, which at its peak had roughly $26 billion in assets under management after a successful bet against mortgage bonds prior to the housing bust. The fund's assets have dwindled to just a few billion, the New York Times reports. Meanwhile, in bankruptcy LightSquared will likely receive greater input from its lenders like hedge fund manager David Tepper, Fortress Investment Group ( FIG), Knighthead Capital Management, Redwood Capital Management and investment firm Capital Research. In the company's bankruptcy filing, LightSquared said that Boeing Satellite Systems and Alcatel-Lucent ( ALU) are its largest claimants. Reuters reported earlier in May that Carl Icahn, once a large owner of LightSquared debt, sold a $250 million position in the venture's debt at a moderate profit. Meanwhile, the New York Post reported that Charlie Ergen of Dish Network ( DISH) acquired $350 million of the company's debt. In April, Falcone said that he would consider a bankruptcy, however his focus was on swapping the venture's assets for spectrum controlled by the U.S. Department of Defense. Falcone also told Reuters that a bankruptcy would give LightSquared the chance to fix interference issues with global positioning devices as it tried to revive a build out of a nationwide wireless broadband network on airwaves once used by satellite systems.