June 28 (Bloomberg) -- LightSquared Inc., Philip Falcone’s wireless broadband company, agreed on terms of a bankruptcy plan that won’t need the support of creditor Charles Ergen, a mediator said.
While announcing that talks were “primarily successful” in a memo yesterday, U.S. Bankruptcy Judge Robert Drain in New York also said Ergen, the chairman of Dish Network Corp., and the fund he used to acquire debt in LightSquared, didn’t take part in good faith and “wasted the parties and the mediator’s time and resources.” Ergen left one mediation session without permission, Drain said.
U.S. Bankruptcy Judge Shelley Chapman ordered the mediation, led by Drain, last month after she rejected Falcone’s plan for the company to exit bankruptcy. Chapman said the plan designed by Falcone, the company’s controlling shareholder, was unfair to Ergen, while she also criticized the Dish chairman’s actions during the bankruptcy.
“With the exception of one party, all of the parties to the mediation have agreed on the key business terms of a Chapter 11 plan for the debtors that should be confirmable without the support of the one party,” Drain said in yesterday’s filing. The dissenting party is the Ergen fund, he said.
Rachel Strickland, an attorney for Ergen, didn’t return a phone call seeking comment on the mediator’s report. A status conference in the case is scheduled for July 1.
LightSquared, based in Reston, Virginia, sought bankruptcy protection in 2012 after the Federal Communications Commission blocked its service, saying it might interfere with global positioning system navigation equipment. It still hasn’t obtained U.S. regulatory approval to use its airwaves.
The prior, rejected plan, also proposed going forward without Ergen’s permission. The company had sought to put his $1 billion debt claim behind those of other creditors as it reorganized with $2.5 billion in financing backed by Fortress Investment Group LLC, JPMorgan & Chase & Co. and Melody Capital Advisors LLC, leaving Falcone with an equity stake in a new company.
LightSquared accused Ergen, 61, of secretly snapping up its debt to hijack its reorganization and get its airwaves at a discount. At one point during the case, Ergen offered $2.2 billion for LightSqaured’s assets, only to withdraw the proposal, citing an undisclosed technical issue.
Drain didn’t provide details of the agreement, which was hammered out in mediation sessions over three days in June. He said Ergen’s fund was offered a chance to make a “certain proposal” at the final session and failed to do so.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Tiffany Kary in New York at email@example.com
To contact the editors responsible for this story: Andrew Dunn at firstname.lastname@example.org Michael Hytha