LightSquared Offers New Dish Proposal With Ergen in MindTiffany Kary
Philip Falcone’s LightSquared Inc. filed a reorganization plan that offers new treatment to Dish Network Corp. Chairman Charles Ergen’s $1 billion in debt, in a bid to resolve a protracted legal fight.
A dispute between the bankrupt wireless broadband company and Ergen, its one-time suitor, scuttled an earlier effort to reorganize. A new plan filed today “offers a compromised treatment” for Ergen’s debt “that would avoid costly litigation” over how his claim should be treated, according to the court papers, which didn’t include many details of the new treatment. The plan allows Ergen to vote for or against it.
The Chapter 11 plan is “the only restructuring proposal that avoids a value-minimizing liquidation” and will allow the company to exit bankruptcy, according to the filling. It would pay senior secured claims in full and give potential recoveries to more junior stakeholders through an auction of stock in a newly reorganized company.
A LightSquared lawyer disclosed the company’s settlement with Ergen at a July 14 court hearing. The lawyer, Joshua Sussberg, representing a special committee of LightSquared, told U.S. Bankruptcy Judge Shelley Chapman that the new deal would “alleviate a significant burden and execution risk around the plan,” and that details would be filed later.
During LightSquared’s attempt to negotiate a prior plan, Falcone accused Ergen of accumulating the debt in secret and trying to hijack the reorganization. Falcone’s Harbinger Capital Partners LLC fought to send Ergen to the back of the line of creditors to be repaid.
The investment fund sued Ergen and Englewood, Colorado-based Dish, accusing them of using “improper tactics” in trying to obtain LightSquared’s airwaves.
The new plan will have a term loan of $1 billion if Ergen votes to accept it, or $1.2 billion plus potential further amounts if Ergen votes to reject it, according to the filing.
LightSquared, based in Reston, Virginia, sought bankruptcy protection in 2012 after the FCC blocked its service, saying it might interfere with global positioning system navigation equipment. LightSquared still hasn’t obtained U.S. regulatory approval to use its airwaves.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).