A bankruptcy court has, at the request of a group of lenders, delayed LightSquared’s hearing to decide whether to extend the company’s exclusivity period for filing its own bankruptcy plan.
The hearing was due to take place on 14 September, but The…
A bankruptcy court has, at the request of a group of lenders, delayed LightSquared’s hearing to decide whether to extend the company’s exclusivity period for filing its own bankruptcy plan.
The hearing was due to take place on 14 September, but The United States Bankruptcy Court for the Southern District of New York has said it will now take place on 1 October after the Ad Hoc Secured Group of Prepetition LP Lenders intervened.
LightSquared has been locked in negotiations with the Federal Communications Commission (FCC) since February when the regulator blocked the venture putting its L-band spectrum to work due to concerns over interference with GPS. The National Telecommunications and Information Administration (NTIA), the federal agency that coordinates spectrum uses for the military and other government entities, concluded there was “no practical way to mitigate potential interference”.
The regulator is yet to release a final ruling and industry observers have suggested it could be announced in the coming months. It is unclear at this point if an FCC ruling could now come before the new hearing date on 1 October. An FCC spokesperson declined to comment.
In May the embattled company filed for bankruptcy protection to buy itself time as majority owner Phil Falcone looked to overcome regulatory difficulties with the FCC.
However, the group of LightSquared lenders described this as a “high risk approach” last week and would prefer to vet the value of its assets on the market.
In a court filing last week, the lenders said Falcone was using bankruptcy protection to hold the lenders hostage.
“Having nothing to lose, Mr Falcone wants to pursue a high-risk, high return strategy that is pinned on first obtaining a reversal of the FCC’s decision to suspend the debtors’ authority to use their spectrum terrestrially, and then somehow funding and building out a network,” the lenders said.
The lenders also opposed the indebted company’s plan to issue US$6m in bonuses to its four top executives.
