Judge rejects proposed member of LightSquared auction committee

Tue Sep 24, 2013 1:53pm EDT
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By Nick Brown

NEW YORK (Reuters) - A U.S. judge on Tuesday blocked a proposed appointee to a committee to oversee the bankruptcy auction of broadband company LightSquared LP, citing a conflict of interests, and admonished the company for making the nomination.

Donna Alderman cannot be part of the committee because she could be seen as having a bias against satellite television company Dish Network Corp, which is seeking to acquire LightSquared's spectrum, U.S. Bankruptcy Judge Shelley Chapman said.

Alderman, a former director at satellite operator DBSD, lost her job when Dish acquired DBSD in 2011, then unsuccessfully sought $7 million from Dish for her role in generating value for DBSD's estate. She ended up with $750,000 in severance.

LightSquared's creditors objected to Alderman's appointment on Monday, citing her bitterness toward Dish.

At a hearing in the U.S. Bankruptcy Court in New York on Tuesday, Chapman lambasted the proposed appointment, saying Alderman could be perceived as having an anti-Dish bias.

"Let's cut to the chase," Chapman told a lawyer for LightSquared. "You had a list of a dozen candidates. And yet we have someone who has caused, with all due respect, a tremendous amount of controversy and raised the specter of yet another sideshow. Frankly, I don't understand it."

A source with knowledge of the situation said Alderman and Dish had a falling-out after DBSD was bought by Dish, and in emails reported by the Wall Street Journal on Monday, Alderman said she felt "screwed" by Dish.

At Tuesday's hearing, LightSquared attorney Matthew Barr played down Alderman's feelings toward Dish.   Continued...