Joel R. Glucksman
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LightSquared seeks ruling ahead of bankruptcy hearing
Author: Joel R. Glucksman
Date: March 27, 2014
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Broadband company LightSquared urged U.S. Bankruptcy Judge Shelley Chapman on March 17 to find that its largest creditor, Dish Network Corp Chairman Charles Ergen, acquired his $850 million stake in the company improperly, according to Reuters. The outcome of the case between the company and Ergen – the closing arguments for which were heard March 17 – is likely to influence the nature of the company’s wireless rights moving forward. LightSquared filed for protection under Chapter 11 of the bankruptcy law not long ago, proposing a plan of reorganization that is contingent upon a favorable ruling in the company’s lawsuit against Ergen.
Dish Network Corp is a direct competitor of LightSquared, and as such would have been barred from acquiring this debt, according to the New York Post. Instead, Ergen himself bought the $850 million controlling share of the company’s senior loan with $700 million of his personal money, a move that was intended to pave the way for Ergen’s company to purchase LightSquared’s spectrum cheaply, the company’s lawyers argue.
LightSquared’s lawyers feel that Ergen should lose his entire stake in the company, according to the news source – a decision which rests with Judge Chapman. Ergen’s lawyer, Rachel Strickland, argues that the mogul shouldn’t lose any of his investment, because he did nothing to damage the company or influence its bankruptcy. She argues that Phil Falcone, one of the company’s chief investors, welcomed the Chapter 11 filing, because it will give him more time as he awaits an FCC resolution that would allow him to retain his equity. Further, Strickland asserts that Falcone manipulated the company’s debt to preserve Ergen’s share in the company’s debt.
“There’s got to be a consequence,” the judge told Ergen, according to the news source. “You know how you tell children there’s a consequence to doing wrong?”
Chapman also had harsh words for LightSquared, according to Reuters.
“No one called 911,” she said. “No one said, ‘Help, there’s a competitor in my capital
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