Harbinger Capital Partners and founder Philip Falcone won a small victory this week as they try to block creditors of Harbinger's largest investment from suing them.
Those lenders, including Mast Capital Partners and Fortress Investment Group, sought permission to sue Harbinger, Falcone and U.S. Bank in September and pressed their case on Wednesday. But U.S. Bankruptcy Court Judge Shelley Chapman said that she would not rule until after the end of this month, when LightSquared, the Harbinger-owned wireless Internet company, will seek to maintain exclusive control of its bankruptcy process.
The LightSquared creditors have asked for the right to sue Harbinger, Falcone and U.S. Bank on behalf of LightSquared, which they say will "not sue their controlling insider." In particular, the creditors have taken issue with a $263.8 million loan Harbinger made to LightSquared, which they say was really an equity infusion.
Harbinger and U.S. Bank say that the lenders have no standing to sue them as "creditors of a creditor."
"There are a lot of complicated issues," Chapman said, without indicating which way, if any, she was leaning.