Ahead of bankruptcy hearing, LightSquared seeks finding against Ergen
By Nick Brown
NEW YORK (Reuters) - Broadband company LightSquared on Monday urged a judge to find that its largest creditor, Dish Network Corp Chairman Charles Ergen, acquired his debt holding improperly.
U.S. Bankruptcy Judge Shelley Chapman was hearing closing arguments in a trial over whether Ergen concealed his identity to acquire his controlling stake of LightSquared's debt. The outcome of the trial is likely to determine the fate of LightSquared's wireless rights after it emerges from Chapter 11.
"There's no question that Ergen was a competitor" of LightSquared, and should not have been able to buy its debt, a lawyer for LightSquared, Andrew LeBlanc, told Chapman.
LightSquared filed for bankruptcy in 2012 after the Federal Communications Commission revoked its license to build a planned wireless network on concerns it could interfere with GPS systems.
Ergen bought up about $1 billion worth of LightSquared's debt, despite an agreement between LightSquared and its lenders that barred competitors from acquiring the company's debt. Ergen later said he bought the debt in his personal capacity, not on behalf of Dish.
LightSquared and its main shareholder, Phil Falcone's Harbinger Capital Partners, sued Dish and Ergen, saying Ergen had bought the debt on Dish's behalf and to circumvent the credit agreement and stack the deck for a Dish takeover.
A Dish unit last year bid $2.2 billion for LightSquared, but dropped the offer in January.
LightSquared has proposed to exit bankruptcy under a plan that would subordinate Ergen's claims while paying other secured creditors in full and allow Harbinger to retain an ownership stake. A bankruptcy confirmation hearing is to start on Wednesday. Continued...