By Dietrich Knauth

Jan 7 (Reuters) - Bankrupt satellite communications company Ligado on Tuesday sued its contract partner Inmarsat over a 2007 spectrum leasing agreement, seeking to recoup up to $1.7 billion in payments under the agreement.

Ligado, which filed for Chapter 11 protection late Sunday, said the UK-based satellite telecommunications company violated the 2007 agreement meant to coordinate the two companies' use of in-demand radio frequencies for mobile communications and other commercial uses.

Inmarsat failed to make required upgrades to its satellite network and continued to demand payments from Ligado, despite the fact that a dispute with the U.S. government prevented Ligado from monetizing the leased spectrum, according to a complaint filed Tuesday in Delaware bankruptcy court.

An Inmarsat spokesman said Tuesday that the complaint had no legal merit and was replete with "unfounded allegations".

Inmarsat attorney Laura Davis Jones said in a Tuesday court hearing in Wilmington, Delaware, that Ligado was $500 million behind on its contractually required lease payments, with additional obligations accruing quarterly.

"We see it very differently," Jones told U.S. Bankruptcy Judge Thomas Horan, who is overseeing Ligado's Chapter 11 case. "Inmarsat has not been paid for years."

Horan approved some routine initial steps in Ligado's bankruptcy restructuring on Tuesday, such as allowing it to pay employee wages and access additional financing provided by its existing lenders. Ligado entered bankruptcy with a restructuring agreement that would cut $7.8 billion debt if approved in court.

Ligado's complaint alleged that the Inmarsat cooperation agreement was crucial to its stalled plan to use land-based cellular towers to supplement its satellite-based mobile services in a spectrum of frequencies known as the L Band.

The agreement required Inmarsat to upgrade its own satellite terminals, which are installed on airplanes and ships, to eliminate potential signal interference near airports and waterways, but Inmarsat failed to make the upgrades, according to Ligado’s complaint.

Ligado also alleged that Inmarsat stood by while the U.S. Department of Defense blocked Ligado’s proposed expansion of land-based wireless services over concerns about the potential interference with global positioning satellite $(GPS.AU)$ systems. Ligado has sued the DOD and other federal agencies over their decision to block it from using a portion of the wireless spectrum that was allocated to Ligado by the U.S. Federal Communications Commission.

Inmarsat, through its other work with the Defense Department, likely knew that the government would prevent Ligado’s planned expansion into land-based 5G wireless services, but it continued to induce Ligado into making additional contract payments, according to the complaint.

The case is: Ligado Networks LLC v. Inmarsat Global Ltd, U.S. Bankruptcy Court for the District of Delaware, No. 25-5000

For Ligado: Andrew Leblanc of Milbank

For Inmarsat: Laura Davis Jones of Pachulski Stang Ziehl & Jones

Read more:

Ligado files for bankruptcy after stalled wireless expansion

Pentagon warns of GPS interference from Ligado broadband network

(Reporting by Dietrich Knauth in New York)