By Nick Brown
NEW YORK Jan 15 A hedge fund manager who
handled debt purchases at the center of a trial over the
bankruptcy of LightSquared said on Wednesday he did not recall
whether Dish Network Corp Chairman Charles Ergen was
buying the debt to influence the bankruptcy.
Stephen Ketchum, the head of Sound Point Capital, also
testified that he could not recall how badly Ergen wanted the
debt of the wireless communications company, apparently
contradicting an earlier deposition and drawing a reminder from
the judge that he was under oath.
Ergen's motivation for buying LightSquared's debt is central
to the trial, which is taking place in the U.S. bankruptcy court
in Manhattan. LightSquared and its owner, Harbinger Capital
Partners, accuse Ergen of improperly buying the debt as a way
for Dish to take control of LightSquared's wireless broadband
rights. Ergen has said he was buying the debt for his own
LightSquared has alleged that Ergen hid his identity as the
purchaser to get around a provision in LightSquared's debt
agreements banning competitors such as Dish from acquiring its
In court on Wednesday, the fourth day of the trial, Ketchum
said several times that he did not recall the answers to
At one point, Ketchum said he did not know whether Ergen had
a strong appetite for LightSquared debt, prompting LightSquared
lawyer Michael Hirschfeld to excerpt a portion of his deposition
in which he had said Ergen had an "appetite for more."
When he said that, he did not recall whether Ergen was
seeking a blocking position - or enough debt to block a
restructuring proposal he opposed - Hirschfeld referred to
emails in which Ketchum told an Ergen associate what it would
take to acquire such a blocking position.
Ketchum said the emails were just presentations of the
"calculation" it would take to attain the position, not an
affirmation of an explicit goal of Ergen's.
Judge Shelley Chapman then told Ketchum he was "obligated to
give truthful answers."
"If it occurs to you that you gave an answer at your
deposition that may not accurately reflect the truth, you're
obligated to correct that," Chapman said.
It is unclear how Ketchum's testimony will affect the
outcome of the trial. LightSquared has said that it was always
Ergen's goal to find a way to control LightSquared's bankruptcy.
Ketchum's testimony suggests it eventually became Ergen's goal
to acquire a blocking position, but the timing of when he
decided to do so remains unclear.
LightSquared's lawyers also need to convince Chapman that
the purchases were improper, and that they were tied to Dish's
ambitions to expand into the spectrum space.
While Dish eventually made a $2.2 billion bid for
LightSquared, it withdrew the offer last week. It is unclear
whether Dish is still interested in acquiring LightSquared's
LightSquared is pursuing the trial despite Dish's withdrawal
because, if Ergen and Dish are found liable, LightSquared could
recoup billions of dollars for the benefit of creditors, and
Ergen's top-priority creditor claims would be subordinated.
LightSquared went bankrupt in 2012, when the Federal
Communications Commission blocked its plans to build a massive
wireless network amid fears that it could interfere with GPS
Ergen testified on Monday, insisting the debt purchases were
personal and not business-oriented, calling LightSquared a
Phil Falcone, the head of Harbinger Capital Partners, which
owns LightSquared, had been scheduled to testify on Wednesday,
but will do so on Thursday after Ketchum's testimony took longer
The lawsuit accuses Dish and Ergen of delaying the closure
of trades to hinder LightSquared's restructuring talks with
In one instance, Ergen's investment vehicle directed a
seller from which it was buying LightSquared debt to vote
against a one-week extension that would have given LightSquared
more time to negotiate a consensual restructuring with
Separately, Harbinger on Wednesday asked a Manhattan federal
judge for permission to appeal Chapman's Nov. 21, 2013,
dismissal of its lawsuit seeking damages from Dish and Ergen for
their alleged fraudulent effort to strip it of control over
Chapman said Harbinger failed to allege enough facts to
support its fraud claims, but Harbinger said the judge
interpreted the law incorrectly.
Harbinger also said it believes it has an automatic right to
appeal, but asked for permission in the event it does not.