LightSquared lodges claims against Ergen, Dish
By Billy Cheung and Amanda Becker
NEW YORK (Reuters) - Bankrupt wireless communications firm LightSquared Inc has filed a lawsuit accusing Dish Network Corp (DISH.O: Quote) and its chairman, Charles Ergen, of improperly trying to take control of LightSquared's broadband spectrum.
The lawsuit, filed in the U.S. bankruptcy court in New York late on Friday, is an effort to revive an earlier case by LightSquared's controlling stakeholder, Phil Falcone's Harbinger Capital Partners, that was thrown out last month.
LightSquared alleges that Dish, Ergen, and other Ergen-controlled entities made improper trades and violated a key credit agreement in order to become LightSquared's largest creditor, with the intention of taking control of LightSquared's spectrum, the airwaves used for wireless communications.
A spokesman for Dish called the allegations a "desperate measure" by LightSquared to avoid selling its assets.
The lawsuit is the latest front in an ongoing battle between Ergen and Falcone for control of LightSquared.
LightSquared filed for Chapter 11 in May 2012 after the Federal Communications Commission tentatively blocked it from building a wireless network amid concerns that the signal from the network could interfere with the global positioning satellite industry.
In its lawsuit on Friday, LightSquared alleged that an Ergen entity surreptitiously amassed a controlling block of LightSquared loans. It said this entity delayed the closing of a number of large loan trades to hide the identity of the buyer, namely Ergen, and derail negotiations with creditors as LightSquared neared the end of a deadline to file a restructuring plan.
The cumulative effect was to provide Dish with substantial leverage over an auction of LightSquared's spectrum, which is set to be held in December, the lawsuit said. Continued...