NEW YORK (Reuters) - LightSquared hopes to submit a consensual restructuring plan by Friday, although the judge overseeing the wireless venture’s bankruptcy isn’t convinced that will happen.
In a court hearing on Tuesday, a lawyer for the company said it aims to file a reorganization plan that has the support of its creditors by Friday, putting the company, owned by Phil Falcone’s Harbinger Capital Partners, on track to exit bankruptcy around the end of March.
But Judge Shelley Chapman, in U.S. Bankruptcy Court in Manhattan, voiced skepticism that parties in the fractious case could reach a deal by then.
“The likelihood of there being something consensual by Friday seems to be zero,” Chapman said.
LightSquared went bankrupt in 2012 after the Federal Communications Commission revoked its license to build a massive wireless network, amid fears it could interfere with GPS systems.
Three competing restructuring proposals are on the table - one backed by Harbinger and two others from creditor groups - but the company has said it plans to engage creditors and work toward a consensual deal.
The key question is whether any restructuring plan would have the support of an investment vehicle run by Dish Network Corp Chairman Charles Ergen. The Ergen entity holds enough LightSquared debt to give him sufficient voting clout to block any restructuring plans that he opposes.
So far, discussions with creditors have not included Ergen, and the sides have been anything but friendly throughout the case. LightSquared has accused Ergen in a separate lawsuit of surreptitiously buying up its debt to set the stage for a takeover of the company by Dish.
Dish indeed made a $2.2 billion offer for LightSquared’s spectrum, but withdrew the offer last month.
A separate trial in the lawsuit against Ergen is ongoing, and Chapman on Tuesday scheduled closing arguments in that case for March 12. She requested additional evidence from LightSquared to back up its argument that Ergen bought the debt on behalf of Dish in an effort to circumvent a credit agreement that barred competitors like Dish from acquiring the debt.
Ergen maintains his LightSquared purchases were personal investments.
The case is In Re LightSquared Inc et al., U.S. Bankruptcy Court, Southern District of New York, No. 12-12080.
Reporting by Billy Cheung; Additional reporting by Nick Brown; Editing by Eric Walsh