The firm has been saddled with crippling debts and has failed to attract large numbers of subscribers.

Two days ago, Iridium revealed it would be unable to meet its obligations on loans worth $1.5bn.

Now company chiefs say they are planning a sweeping financial restructuring and are seeking protection from creditors under bankruptcy laws.

They are using legislation which allows an indebted company to retain control of its operations while arrangements are worked out with creditors.

'A stronger company'

Chief executive John Richardson said: "We are confident that Iridium will emerge from this process a stronger and more vibrant company in the telecommunications marketplace."

A company statement added that there would be no interruption in Iridium's global service.

Iridium launched its service on November 1, touting its capacity to enable users to make and receive calls from any spot on the planet.

The system functions with 66 low earth-orbiting satellites in conjunction with existing terrestrial cellular networks.

But the scheme was delayed by technical problems and criticised for high prices and the chunky size of the phones.

Iridium's slower-than-expected subscriber growth has exacerbated its debt woes.

Motorola, the company's biggest shareholder, expressed strong support for the business and said it believed restructuring could be accomplished within 30 days.

It said it would continue to invest in the technology and develop new Iridium products.