LightSquared’s bankruptcy judge has rejected a proposed independent director put forward by the satellite/terrestrial venture to help oversee its sale in December.
Judge Shelley Chapman said Donna Alderman cannot be part of the committee because she…
LightSquared’s bankruptcy judge has rejected a proposed independent director put forward by the satellite/terrestrial venture to help oversee its sale in December.
Judge Shelley Chapman said Donna Alderman cannot be part of the committee because she could be seen as having a bias against US DTH giant Dish Network, which through an affiliate has already made a US$2.2bn bid for it.
Court reports detail Chapman admonishing LightSquared for raising the “spectre of yet another sideshow” in nominating Alderman, who lost her job as a director at satellite operator DBSD North America (formerly ICO North America) after Dish acquired it out of bankruptcy in 2011.
Earlier this week the Wall Street Journal uncovered emails where Alderman said she felt “screwed” by Dish in being left with US$750,000 in severance, after seeking US$7m because of her role in generating value at DBSD.
An ad hoc group of LightSquared’s lenders had argued against the appointment because of her “troubled history” with Dish chairman Charlie Ergen and his affiliates.
In court documents, the group also argued against the nominations of LightSquared CEO Douglas Smith and David Murgio, the restructuring committee chair on the venture’s board, as non-voting members of the special committee.
The lenders are at odds with LightSquared’s owner, hedgefund Harbinger Capital Partners, over how to run the auction of its assets. Whereas the creditors are seeking to open up the auction using Ergen’s stalking horse bid, which would cover their circa US$1.7bn of debt, Harbinger claims the offer is not viable because it is linked to debt trades by a strategic competitor (Dish) that allegedly goes against bankruptcy rules.
The hearing yesterday had been due to hear arguments over competing proposals to run the auction, but this was reportedly adjourned to next Monday.
Meanwhile, Harbinger has launched a lawsuit against Ergen over the debt trades. It is also suing key members of the US GPS industry that had lobbied against LightSquared’s business plan after spectrum interference issues came to light.
Those interference concerns prompted the FCC to ban the commercial roll out of LightSquared’s LTE network, leading it to file for voluntary reorganisation under Chapter 11 bankruptcy protection back in May 2012.
The company has been busy negotiating with FCC officials for a way around these regulatory concerns, including possibly swapping the afflicted frequencies with government spectrum.
The lenders are being represented by White & Case, while Milbank is representing LightSquared.
