LightSquared Plans May Not Work, U.S. Trustee Says

LightSquared Inc., Philip Falcone’s bankrupt wireless spectrum company, may not have a feasible plan to reorganize, the U.S. Trustee said in an objection to all four competing proposals.

Three plans include a sale of some company assets, while a fourth proposes a reorganization. None of them may work given regulatory hurdles in the U.S. and Canada, as well as the plans’ failure to comply with the Bankruptcy Code, Tracy Hope Davis, the acting U.S. Trustee, said in a court filing today. The U.S. Trustee is the arm of the Justice Department that oversees bankruptcies.

LightSquared, based in Reston, Virginia, filed for bankruptcy in May 2012, listing assets of $4.48 billion and debt of $2.29 billion. Regulators including the Federal Communications Commission blocked the service after makers and users of global positioning system devices said its signals would confound navigation gear.

“None of the plans may be feasible given the uncertainty of FCC and/or Industry Canada approval of the assignment or transfer of control of any rights and interests in any of the debtors’ spectrum assets and the length of time the approval process may take,” Davis said.

The proposals include a plan to sell most of the company’s spectrum assets at an auction led by a $2.22 billion bid from a unit of Charlie Ergen’s Dish Network Corp. LightSquared is suing Ergen over how he accumulated a stake in the company’s debt.

The plans were put forward by an ad hoc group of secured lenders, LightSquared itself, Mast Capital Management LLC and U.S. Bank National Association, and Harbinger, Falcone’s investment company.

The bankruptcy case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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