A request from LightSquared’s lenders to delay a key bankruptcy hearing by a few weeks to 1 October could suggest that a long-awaited FCC ruling is on the way.
The request from a group of lenders to LightSquared LP, the satellite/terrestrial…
A request from LightSquared’s lenders to delay a key bankruptcy hearing by a few weeks to 1 October could suggest that a long-awaited FCC ruling is on the way.
The request from a group of lenders to LightSquared LP, the satellite/terrestrial venture’s main operating unit, was granted earlier this week to shift the hearing, which will decide whether to extend the company’s exclusivity period for filing its own bankruptcy plan. This hearing was previously due to take place on 14 September.
Lenders are opposed to proposals from Philip Falcone, who owns the majority of LightSquared’s equity through his Harbinger Capital Partners hedge fund, to extend this exclusivity period. Falcone, who has been using the bankruptcy process to keep creditors at bay, is negotiating with the FCC to clear regulatory obstacles that are prohibiting the venture from launching commercially.
But a group representing US$1.08bn of LightSquared LP debt strongly criticised this “high risk approach” in court filings last week. Instead, they called for a “more conservative” strategy, which would involve vetting the venture’s assets on the market to realise their value.
Industry spectators have previously suggested that the FCC could announce an outcome of its LightSquared talks before the end of the year. If a ruling comes before LightSquared’s bankruptcy hearing, it would give much needed clarity to both sides.
However, other industry watchers find it hard to believe that the regulator would announce any such decision before the outcome of the US Presidential election. One source close to the situation pointed to a so-called oversight hearing that could be set up next week, which would review the FCC’s handling of the LightSquared case and could account for the delay.
An FCC spokesperson declined to comment.
LightSquared has been locked in negotiations with the FCC since February, when the regulator blocked the venture from putting its L-band spectrum to work because of interference concerns with GPS technology. One possible solution Falcone is hoping to secure involves swapping the afflicted spectrum with frequencies currently held by the US government.
