A Dish Network Corp. unit can probably walk away from its proposed purchase of Philip Falcone’s LightSquared Inc., a judge said, dealing a setback to a lender group that contends the bid must remain a part of its plan to get the wireless venture out of bankruptcy.
U.S. Bankruptcy Judge Shelley Chapman said today in Manhattan that she is “tentatively” ruling the Dish unit lawfully terminated its bid. Chapman, who said she will make a final decision later, said the lenders group may move ahead with its plan regardless that the bid “has in fact been withdrawn.”
The lenders group, which holds debt in LightSquared unit LightSquared LP, argued the bid was “irrevocable.” The lenders urged the judge to push forward their plan, which called for Lightsquared’s purchase by the Dish unit, even though the unit said its bid was no longer on the table.
The court order allowing L-Band Acquisition LLC, a wholly owned unit of Dish, to make a $2.22 billion bid for LightSquared was “totally clear” that all aspects of it were irrevocable, Glenn Kurtz, a lawyer for the lenders group, said in a hearing today.
The group wants the judge to force L-Band to make good on its bid or to be allowed to pursue damages against the company, according to court papers filed on Jan. 20.
A lawyer for L-Band, Rachel Strickland, said it’s “free to withdraw its bid at any time” and could do it “by handing them a Post-It note.”
LightSquared, controlled by Falcone’s Harbinger Capital Partners LLC, is seeking to exit bankruptcy through a separate plan supported by Fortress Investment Group LLC, JPMorgan Chase & Co. and Melody Capital Advisors LLC.
Although the Dish affiliate said it wants to back out of the lenders’ bid, LightSquared has alleged that Dish Chairman Charlie Ergen secretly acquired $1 billion of its debt in an attempt to take over its spectrum.
Ergen contends he bought the debt as a personal investment, not for Dish. A trial taking place before Chapman over Ergen’s purchases may determine whether his claim for the $1 billion in debt will be disallowed.
LightSquared, based in Reston, Virginia, sought to establish a high-speed wireless network. The company filed for bankruptcy in May 2012 after the Federal Communications Commission blocked its initial proposal to use wireless spectrum, saying it might interfere with global-positioning system navigation equipment.
Complicating the company’s bid to exit bankruptcy, the FCC said last week that LightSquared’s plan may not be approved by the agency by the end of the year.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).