| NEW YORK, March 20
NEW YORK, March 20 New evidence may emerge in a
dispute between LightSquared and its largest creditor, Dish
Network Corp Chairman Charles Ergen, that could affect the
bankrupt wireless company's restructuring.
U.S. Bankruptcy Judge Shelley Chapman said at a hearing on
Wednesday that she had received a letter the night before that
led her to question the "integrity of the record" in a
just-completed trial on the dispute over Ergen's purchases of
She did not disclose the contents of the letter, but two
sources close to the matter said it concerned delays in the
closing of the debt purchases.
"I don't know what we're doing at this point," Chapman said.
"There needs to be a discussion about whether" to reopen the
record in the trial, which ended on Monday.
The trial had centered on whether Ergen improperly acquired
$1 billion of the debt to take control of LightSquared's
Chapman, who is presiding over the bankruptcy itself, has
not yet issued a ruling in the trial.
LightSquared sued Ergen, proposing that his debt holdings be
subordinate to those of other secured lenders when the company
exits bankruptcy. Ergen says he bought the debt in a personal
The sources said the letter concerned LightSquared's
allegations that Ergen held up the closing of some of his debt
purchases to conceal his identity and frustrate restructuring
efforts. That allegation is important for LightSquared, which
must convince Chapman that Ergen acted surreptitiously and that
his actions hurt the company.
During closing arguments on Monday, Ergen's lawyer, Rachel
Strickland, challenged the allegation, telling the court it was
Jefferies LLC, the broker on the transactions, that held up the
trades. Strickland said Jefferies had imposed a moratorium on
closing the transactions until documentation issues were sorted
Chapman told Strickland that point had not been raised in
"I'm reacting to the notion, which I'm hearing for the first
time at 5 o'clock today, that there was a moratorium on
closing," Chapman said at the time. "If that document exists,
I'd like to be pointed to it."
If the letter referenced on Wednesday indeed indicates that
Jefferies played a role in the delays, it could help Ergen's
case that he did not act improperly. Representatives of
Jefferies did not immediately respond to requests for comment.
LightSquared's lawyer, Matthew Barr, said at Wednesday's
hearing that he was "very, very troubled" by the letter. "We
fully intend to express our views" on it, Barr said. "We will
endeavor to do that in the next day or two."
LightSquared, which is controlled by Phil Falcone's
Harbinger Capital Partners, declared bankruptcy in 2012, when
the U.S. Federal Communications Commission revoked its license
to build a wireless network because of concerns that it could
interfere with GPS systems.
(Reporting by Nick Brown; Editing by Lisa Von Ahn)