Wednesday, 29 June 2016
Last updated 35 min ago
Aug 13 2012 | 12:37pm ET
LightSquared, the bankrupt wireless Internet company backed by Harbinger Capital Management, doesn't think much of its lenders' request to take a peek at the hedge fund's books.
The Virginia-based company formally opposed a request by creditors, including Mast Capital Management and Fortress Investment Group, for permission to subpoena Harbinger. The group said that their investigation turned up a number of "red flags" surrounding another loan received by LightSquared, one that "may well have consisted solely of insiders." In addition, the creditors argue that their own loan agreement with LightSquared gives them the right to subpoena Harbinger.
But LightSquared, which Harbinger put in bankruptcy in May after being unable to come to a new agreement with lenders, poured scorn on the subpoena request, saying that the lenders mean only to "embarrass" and "harass" Harbinger and to cause LightSquared to continue to lose money, giving them a better position in the company's restructuring.
LightSquared said that the lenders' "unnecessarily aggressive tactics" have included "glaring inconsistencies, and misstatements (and hypocrisy), designed only "to embarrass and harass Harbinger and gain leverage in these cases, which is improper."
A federal bankruptcy court will consider the subpoena request tomorrow.