LightSquared wins key ruling over debt held by Dish's Ergen
WILMINGTON, Del May 8 (Reuters) - A bankruptcy judge on Thursday ruled to subordinate part of Charles Ergen's $1 billion loan debt claim in the bankruptcy wireless venture LightSquared.
Ergen, who is also chairman of Dish Network Corp, is LightSquared's largest creditor. LightSquared had accused Ergen of acquiring his debt surreptitiously, with an eye toward setting the stage for a Dish takeover, and had asked Judge Shelley Chapman to wipe out the claim or subordinate it below claims of other creditors.
Judge Shelley Chapman, reading her decision from the bench at a hearing on Thursday, said the claim should be subordinated in an amount to be determined.
Chapman said that while Ergen's investment vehicle did not expressly breach a credit agreement when it acquired the debt, it breached the spirit of the agreement, which barred LightSquared's competitors from holding its debt. Chapman's reading was expected to continue throughout the afternoon. (Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio)