(Corrects typographical error in headline)
April 4 Dish Network Corp Chairman
Charles Ergen, the largest creditor of bankrupt wireless company
LightSquared, is seeking permission to sue Phil Falcone, the
investor whose Harbinger Capital fund controls LightSquared.
In a court filing on Friday, Ergen asked the judge
overseeing LightSquared's Chapter 11 bankruptcy case for
permission to bring a lawsuit alleging Falcone mismanaged the
company, focusing on preserving his own investment at the
expense of other stakeholders.
Ergen, who once made money playing Blackjack, compared
Falcone to someone with a gambling problem.
"Just as a compulsive gambler will hang onto a long-shot
wager far past the point he should have cut his losses, Mr.
Falcone tightened his grip on the direction of LightSquared's
restructuring as the company's outlook deteriorated," lawyers
for Ergen's investment vehicle said in the filing.
LightSquared, majority-owned by Harbinger, went bankrupt in
2012, when the Federal Communications Commission revoked its
license to operate spectrum out of concern it could interfere
with GPS systems. Ergen then acquired about $1 billion of the
company's senior loan debt, giving him a controlling stake in
LightSquared's capital structure.
The case has become a messy fight between Ergen and Falcone
for control of the company. Ergen's filing on Friday is a step
toward going on the offensive in a case in which he has
generally been on the defensive.
LightSquared has already sued Ergen, saying he acquired his
debt illegally to set the stage for a Dish takeover. Ergen
countered that he bought the debt solely for his personal
Meanwhile, other LightSquared lenders have accused Ergen of
a bait-and-switch in which a Dish unit made a $2.2 billion offer
for LightSquared, then revoked the offer earlier this year in an
attempt to scoop up the company later at a lower price. Ergen
blamed the withdrawal on an unidentified "technical issue."
Judge Shelley Chapman, in U.S. Bankruptcy Court in New York,
is not expected to rule on whether Ergen acted improperly until
next month. The question of Ergen's motives is central to
LightSquared's plan to exit bankruptcy, which essentially
requires a finding that Ergen acted surreptitiously.
The case is In re: LightSquared Inc et al, U.S. Bankruptcy
Court, Southern District of New York, No 12-12080.
(Reporting by Narottam Medhora in Bangalore and Nick Brown in
New York; Editing by Lisa Shumaker)