LightSquared Can Seek Creditor Vote on Reorganization Plans

October 9, 2013 07:56 AM
LightSquared Can Seek Creditor Vote on Reorganization Plans

LightSquared Inc., Philip Falcone’s bankrupt wireless-spectrum company, will get court permission to have creditors vote on four competing plans to restructure the company.

U.S. Bankruptcy Judge Shelley Chapman in Manhattan today said she would approve all four disclosure statements, which describe the reorganization plans, once final versions are submitted. The plans come from the company, an ad-hoc group of lenders, Falcone’s Harbinger Capital Partners LLC, and U.S. Bank NA and Mast Capital Management LLC. Creditors will vote by Dec. 5, according to court papers.

"All parties have consensually agreed to resolve their formal and informal objections to each others’ disclosure statements," Matthew S. Barr, a lawyer for LightSquared, told Chapman today.

LightSquared’s plan proposes a sale of almost all of its assets at auction while the company seeks approval from the Federal Communications Commission to use its airwaves. The lender group, which holds $1.4 billion of the $1.7 billion in debt of LightSquared’s LP unit, has a similar plan calling for a sale. A unit of Charlie Ergen’s Dish Network Corp. would make a lead, or stalking-horse, bid of $2.2 billion.


Harbinger Plan


Harbinger’s plan would reorganize LightSquared without a sale. U.S. Bank and Mast, a Boston-based investment adviser, focused on the sale of a LightSquared unit, One Dot Six. A unit of Mast, which was LightSquared’s bankruptcy lender, would begin the auction by bidding an amount equal to the company’s debt under the loan, according to court papers.

LightSquared had at first objected to the three rival plans, saying they would waste resources of the bankruptcy estate. Its own plan "subsumes the isolated plans" proposed by the other parties, LightSquared said in court papers.

One creditor, Centaurus Capital, had objected to all plans save Harbinger’s, saying they didn’t disclose some potential problems: LightSquared will need more money before the end of the year, and selling the company before it gets FCC approval would make the entire reorganization unworkable under bankruptcy law, Centaurus said in court papers.

LightSquared, based in Reston, Virginia, filed for bankruptcy in May 2012, listing assets of $4.48 billion and debt of $2.29 billion. U.S. regulators blocked the service after makers and users of global positioning system devices, including the U.S. military and commercial airlines, said LightSquared’s signals would confound navigation gear.


Suit Halted


Separately, LightSquared can halt a lawsuit that Harbinger brought against the GPS industry, Chapman said. The company said the case overlaps with issues raised in the bankruptcy. LightSquared asked the court to keep the lawsuit from going forward for 60 days as it might "distract key LightSquared officers and employees from the restructuring efforts at a critical stage."

The case was filed in August in U.S. District Court against Deere & Co., Garmin International Inc., Trimble Navigation Ltd., the U.S. GPS Industry Council and the Coalition to Save Our GPS.

Falcone, a billionaire hedge-fund manager, in August agreed to be banned from the securities industry for at least five years under a settlement with the U.S. Securities and Exchange Commission over whether he improperly borrowed money from Harbinger to pay his personal taxes and favored some investors over others.

The bankruptcy case is In re LightSquared Inc., 12- bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).


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