Straining under a debt burden in excess of $1 billion, TerreStar Networks filed a petition for Chapter 11 protection with a New York bankruptcy court on Tuesday. Known formerly as Motient Corp., TerreStar is in the midst of deploying a hybrid terrestrial/mobile satellite network that would serve rural and other hard-to-reach areas in the U.S. TerreStar—which recently entered a marketing arrangement with AT&T through which AT&T would sell TerreStar’s dual-mode Genus smart phone to customers who desire satellite phone coverage—launched its first satellite, TerreStar-1, in July 2009 and is currently building a second satellite, dubbed TerreStar-2. In documents filed with the Securities & Exchange Commission in June, TerreStar reported $1.4 billion in assets against liabilities of $1.64 billion. Under the reorganization plan filed with the U.S. Bankruptcy Court in Manhattan, EchoStar Corp.—a key TerreStar shareholder and the company’s largest creditor—has pledged to support a proposed debt-for-equity swap that would cover TerreStar’s secured note holders. In addition to providing TerreStar with $75 million in bankruptcy financing, EchoStar would also backstop a $100 million rights offering that would assist TerreStar’s emergence from bankruptcy. Sources also indicate that TerreStar Corp., the parent company of TerreStar Networks, is not a party to the Chapter 11 proceeding. In a press statement, TerreStar Networks CEO Jeffrey Epstein described his company’s Chapter 11 filing as “a necessary and prudent step to strengthen our balance sheet . . . and position TerreStar Networks as a stronger, healthier company.”