Draper-based USDTV files for bankruptcy again

WASHINGTON — USDigital Inc. has filed for Chapter 7 bankruptcy for a second time in less than a year after owner NexGen Telecom pulled the plug on the digital TV service once touted as the low-cost alternative to cable and satellite television.

The Draper-based wireless broadcaster, also known as USDTV, submitted its petition Monday in the U.S. Bankruptcy Court in Wilmington, Del., just months after it was bought out of bankruptcy by NexGen.

USDTV stopped broadcasting earlier this month after NexGen experienced a "financial setback in another business," according to a statement.

Denver-based NexGen rescued USDTV from liquidation when it bought the company for about $1 million last September, according to court documents. The company listed assets of less than $1 million and debts between $1 million and $10 million in its bare-bones bankruptcy filing.

Unlike Chapter 11, which allows a company to protect itself from creditors and reorganize through a bankruptcy court, in a Chapter 7 case a federal trustee is appointed to liquidate a company's assets.

USDTV leased digital spectrum from local TV stations. Customers who paid $19.95 a month were able to receive local stations plus cable staples such as ESPN, the Discovery Channel and Fox News.

At the time of its bankruptcy filing last July, USDTV had about 17,000 subscribers. As of this month, that number had shrunk to about 7,000 customers located in Salt Lake City, Dallas, Albuquerque and Las Vegas.

Founded in 2003, the company had the backing of a group of TV station owners, including News Corp., Hearst-Argyle Television and McGraw-Hill Broadcasting. By last July, however, those investors placed USDTV in bankruptcy. In September, U.S. Bankruptcy Judge Brendan L. Shannon signed off on USDTV's sale to USDigital, an investment vehicle of NexGen.

The company's liquidation will be handled by Ballard, Spahr, Andrews and Ingersoll. The case number is 07-10374; a judge has yet to be assigned.