Jan 6 A section of LightSquared Inc lenders are
opposing the company's decision to seek a new financing
arrangement as part of its plan to exit bankruptcy, the latest
attack in a highly litigious case involving competing business
In December, LightSquared proposed a new bankruptcy exit
plan with financing from Fortress Investment Group and
other backers, as the U.S. wireless communications company seeks
to avoid a sale to highest bidder Dish Network Corp.
The new plan replaced one based on an auction of the
company's assets. LightSquared scrapped that sale after Dish
emerged as the only qualified bidder, with a $2.2 billion offer
and terms that LightSquared found unappealing.
LightSquared had asked to be allowed to implement the new
plan without going back to creditors to get their approval,
saying the latest deal increases the recovery for creditors.
However, lenders including US Bank and MAST Capital
Management said on Monday that the new arrangement violates an
earlier deal, which prohibited LightSquared from seeking
alternative financing unless the creditors were first paid in
"The Existing Inc DIP Order clearly and unambiguously
establishes certain limitations on the conditions under which
the debtors may seek new DIP financing," the lender group said
in a court filing.
The lender group also asked the court not to permit the new
financing arrangement since the existing obligations have not
yet been paid in full.
The lender group has asked the federal court to hold
LightSquared, its primary shareholder Harbinger Capital, and its
prospective financiers Fortress and Melody Capital Advisors, in
contempt for allegedly violating the existing
Debtor-In-Possession (DIP) order.
The contentious courtroom battle highlights the fierce
competition for wireless spectrum, or broadband frequencies, in
the United States.
Many U.S. mobile operators are buying spectrum to boost
their networks as customers use more and more bandwidth-hungry
data services on phones and tablets.
LightSquared filed for bankruptcy in 2012 after the Federal
Communications Commission (FCC) blocked its plan for a 4G LTE
terrestrial wireless network because the regulator feared it
would interfere with GPS navigation.
The case is In re: LightSquared Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12080.