LightSquared’s bankruptcy court judge has partially thrown out Harbinger Capital Partners’ debt trade lawsuit against Dish Network chairman Charlie Ergen and related entities.
Harbinger, which majority owns the satellite/terrestrial venture, had…
LightSquared’s bankruptcy court judge has partially thrown out Harbinger Capital Partners’ debt trade lawsuit against Dish Network chairman Charlie Ergen and related entities.
Harbinger, which majority owns the satellite/terrestrial venture, had sought more than US$4bn in the suit, accusing Ergen of improperly becoming the largest holder of its debt.
It alleged that the debt trades were made by colluding with a hedge fund called Sound Point through a subsidiary of Dish, which as a competitor is banned from buying LightSquared debt during Chapter 11 protection. But Judge Chapman dismissed those parts of the suit concerning both Sound Point and Dish, the US DTH operator which also plans to bid in an auction for LightSquared’s assets later this year.
She did add, however, that LightSquared itself could sue Ergen if it believes the debt trades were acquired through Dish rather than an investment vehicle he controls.
Court reports said Harbinger could be a party to such legal action, which may take on parts of the original suit. This includes the alleged delays by Ergen to close the trades, which Harbinger has said stopped it from obtaining billions of dollars in exit financing with Jefferies.
According to Dow Jones, much of the hearing on the matter yesterday centred on the definition of what a ‘subsidiary’ is, and whether it applies to Ergen’s SP Special Opportunities investment vehicle.
In a statement following the hearing, the DTH operator said: “Dish is pleased Judge Chapman has dismissed all charges against it this afternoon. The company looks forward to pursuing its bid in the upcoming auction for the LightSquared assets.”
Dish is currently the lead bidder for that auction, pencilled in for next month, with a US$2.2bn bid for the venture’s main spectrum holdings.
LightSquared’s main value is seen as deriving from that spectrum, although GPS interference issues affecting some of the frequencies is part of the reason why it is in Chapter 11 in the first place.
Kasowitz, Benson, Torres & Friedman represented Harbinger and its subsidiaries in the lawsuit. Willkie Farr & Gallagher represented Ergen.
