| NEW YORK
NEW YORK Nov 22 The U.S. Department of
Justice's bankruptcy watchdog on Friday questioned the
feasibility of four competing restructuring plans for bankrupt
LightSquared put forth by the company and its creditors.
In a court filing in U.S. Bankruptcy Court in Manhattan, the
DOJ's U.S. Trustee Program said the plans would provide third
parties with overly broad releases from potential legal claims.
LightSquared, in bankruptcy since 2012, is fighting to keep
control of its valuable spectrum amid a takeover push by Dish
Network Corp. Three creditor groups have proposed plans that
contemplate an auction for the assets, and Dish has already made
a baseline bid of $2.2 billion. A fourth plan, proposed by
LightSquared's majority owner, Phil Falcone's Harbinger Capital
Partners, would restructure the company without an auction, with
Harbinger maintaining control.
LightSquared, which had planned a massive wireless network,
filed for Chapter 11 protection after the Federal Communications
Commission blocked it from using its spectrum amid interference
concerns from the GPS industry.
The Trustee's office said the restructuring plans could be
read to protect third parties from claims related to criminal
conduct and professional malpractice, even though they exclude
fraud and gross negligence claims from the releases.
The Trustee's office also complained that any sale deal
would need FCC clearance, which it characterized as "uncertain."
It added that Harbinger's plan "suffers from the same
regulatory problem" in that it would require LightSquared to
obtain the FCC clearance it previously lost to resume its
The objection will be considered at a hearing on December 10
in Manhattan bankruptcy court.
The case is re LightSquared Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12080.