MUMBAI: Worldspace (or 1Worldspace, as it was rechristened some months ago) has received approval of the United States Bankruptcy Court in Delaware for the first part of an interim Debtor-in-Possession (DIP) financing in an amount up to $2M which will enable the Company to meet payroll obligations to critical employees and commence a process to sell the Company or its assets.

The Company, along with its US subsidiaries Worldspace Systems Corporation and AfriSpace, Inc., had filed voluntary petitions for reorganisation under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court in Delaware on 17 October 2008.

Interestingly, Worldspace India, a wholly owned independent business unit operating in the market where most of the Company's customers are located and revenues are generated, has not filed for protection from its creditors and continues its business activities in the ordinary course.

The Company has commenced a process to market and sell the Company or its assets, or complete an alternative restructuring transaction, says an official release. The Bank Street Group LLC has been appointed as the Company's financial advisor in support of the sale and/or restructuring process.

Worldspace has also appointed Robert Schmitz of Quest Turnaround Advisors, LLC as its Chief Restructuring Officer reporting to Chairman and Chief Executive Officer Noah Samara to assist the Company through an orderly sale or recapitalization process.

India is one of the fastest growing markets for Worldspace as out of its 170,000 subscribers worldwide, over 163,000 subscribers are in India. During its India launch, Worldspace advertised extensively through advertising campaigns with A R Rahman as its brand ambassador. Carrying it forward, the radio service also launched several radio channels targeted at Indians. It now offers over 40 channels including 10 regional language channels and some specialised channels on spirituality, rock and classical music, news channels among others.

The current subscription rate of Worldspace is Rs 1,800 a year and it has been trying to rope in a local partner for a strategic alliance. Worldspace in India faces competition from FM radio which is easily portable and also available free to air. On the other hand, Worldspace due to its annual subscription is an expensive medium at Rs 1800 per compared to radio. To acquire customers, the company subsidized the receiver rates, which inflated the expenses considerably. To increase its availability, Worldspace recently announced its presence on the Airtel DTH platform.