Philip Falcone resigned from the board of LightSquared Inc., the bankrupt wireless-spectrum owner he has tried to build into a rival to U.S. mobile providers, amid negotiations with creditors to reorganize the company.
Falcone and four other people appointed to the board by his Harbinger Capital Partners voluntarily resigned on June 12, according to a letter filed with the Federal Communications Commission and posted on the agency’s website.
Falcone, 51, had been fighting to keep control of the company throughout its two years in bankruptcy. At one point, Dish Network Corp. Chairman Charles Ergen made a $2.22 billion offer for its assets, only to withdraw the bid at the last minute. Falcone accused Ergen of acquiring LightSquared debt improperly to game the bankruptcy process.
U.S. Bankruptcy Judge Shelley Chapman rejected a Falcone-backed reorganization plan in May, saying it was largely unfair to Ergen, while she also faulted Ergen’s behavior during the case. Since then, LightSquared and its creditors have entered court-supervised mediation to work out a new plan.
Tom Surface, a LightSquared spokesman, didn’t immediately respond to telephone and e-mail messages seeking comment on the resignations. LightSquared lawyer Matthew Barr didn’t immediately return a call for comment.
Falcone’s departure is probably a sign of progress in the mediation, said Erik Gordon, a professor at the University of Michigan’s business and law schools.
“This definitely increases the chances of mediation being successful,” Gordon said in a phone interview yesterday. He said Falcone’s posture “has been an impediment for getting much done in the case so far.”
At the time Chapman sent the parties into mediation last month, a lawyer for an independent committee said there was a tentative plan for the company that would involve a third-party investor offering new capital.
In addition to $2.9 billion of assets contributed by Harbinger Capital Partners and affiliates, LightSquared has more than $2.3 billion in debt and equity financing, according to the company’s website.
LightSquared, based in Reston, Virginia, filed for bankruptcy in 2012 after the FCC blocked its proposed service to mobile devices over concerns about interference with GPS navigation gear.
The company proposed using a combination of satellites and ground-based towers to offer a national, wholesale high-speed mobile data service. Its chairman and chief executive officer is Douglas Smith, who was promoted in August 2012 as the company said it would overcome the regulatory impasse. He had served as LightSquared’s co-chief operating officer and helped design its high-speed network.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).