Sunday, 28 August 2016
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Apr 15 2014 | 12:21pm ET
Harbinger Capital Partners' wireless internet venture continued to insist it had no obligation to negotiate with its largest creditor, since, it says, he had no business being a creditor at all.
LightSquared, seeking approval of a $2.65 billion bankruptcy exit plan, wants to pay most creditors in cash. But Dish Network founder Charles Ergen would get only third-lien notes payable over seven years, treatment he argues is unfar.
LightSquared and Harbinger founder Philip Falcone have shot back that Ergen illegally bought the nearly $1 billion in debt, in contravention of covenants barring competitors from owning it. Backed by Ergen, Dish had sought to buy LightSquared out of bankruptcy, a bid it later dropped.
"There is simply no doubt that [Ergen] is receiving the indubitable equivalent of its claim," LightSquared wrote in a court filing. Ergen's response is expected later this month.
LightSquared has said its reorganization plan, backed by Fortress Investment Group, will fail if Ergen's claims are not disallowed. Last week, it won the right to borrow another $74 million from its lenders—including a hedge fund controlled by Ergen—to stave off collapse as it waits for approval of its plans.