| NEW YORK
NEW YORK Nov 17 Bankrupt wireless
communications firm LightSquared Inc has filed a lawsuit
accusing Dish Network Corp and its chairman, Charles
Ergen, of improperly trying to take control of LightSquared's
The lawsuit, filed in the U.S. bankruptcy court in New York
late on Friday, is an effort to revive an earlier case by
LightSquared's controlling stakeholder, Phil Falcone's Harbinger
Capital Partners, that was thrown out last month.
LightSquared alleges that Dish, Ergen, and other
Ergen-controlled entities made improper trades and violated a
key credit agreement in order to become LightSquared's largest
creditor, with the intention of taking control of LightSquared's
spectrum, the airwaves used for wireless communications.
A spokesman for Dish called the allegations a "desperate
measure" by LightSquared to avoid selling its assets.
The lawsuit is the latest front in an ongoing battle between
Ergen and Falcone for control of LightSquared.
LightSquared filed for Chapter 11 in May 2012 after the
Federal Communications Commission tentatively blocked it from
building a wireless network amid concerns that the signal from
the network could interfere with the global positioning
In its lawsuit on Friday, LightSquared alleged that an Ergen
entity surreptitiously amassed a controlling block
of LightSquared loans. It said this entity delayed the closing
of a number of large loan trades to hide the identity of the
buyer, namely Ergen, and derail negotiations with creditors as
LightSquared neared the end of a deadline to file a
The cumulative effect was to provide Dish with substantial
leverage over an auction of LightSquared's spectrum, which is
set to be held in December, the lawsuit said.
The lawsuit seeks to disallow Ergen's claims in the
bankruptcy process that result from the debt purchases and
subordinate those claims behind other creditors. It is also
seeking punitive and compensatory damages.
"This elaborate distraction seems designed to shift
attention from years of LightSquared mismanagement leading to
bankruptcy," Dish spokesman Bob Toevs wrote in an email.
LightSquared's complaint on Friday was styled as a
"complaint-in-intervention," meaning LightSquared is essentially
trying to step in as a plaintiff in an earlier lawsuit.
The lawsuit was originally filed in August by Harbinger,
which owns about 80 percent of LightSquared. U.S. Bankruptcy
Judge Shelley Chapman, who is overseeing LightSquared's
restructuring, last month granted Ergen's request to dismiss the
case, but said other LightSquared entities were not barred from
bringing the allegations.
Harbinger and LightSquared's lenders have proposed competing
plans for how to restructure LightSquared. Lenders are pushing
for an auction while Harbinger has contended that it can pay
back creditors and still retain ownership. Creditors are
currently voting on the proposals, and the auction is ultimately
expected to take place.
In separate litigation, LightSquared has sued members of the
GPS industry, alleging they raised no concerns about
interference until after LightSquared had pumped millions of
dollars into its network. The defendants in that case, which
include Deere & Co, on Friday sought to have the case moved to
federal court from bankruptcy court.
The case is LightSquared Inc et al. v. Ergen et al., U.S.
Bankruptcy Court for the Southern District of New York, No.
The bankruptcy is: In re LightSquared Inc., in the same
court, No. 12-12080.