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LightSquared Adviser Says Ergen Associates Stymied Query

January 18, 2014

Advisers who helped Dish Network Corp. (DISH:US) Chairman Charlie Ergen buy $1 billion of LightSquared Inc. debt refused to disclose his involvement to representatives of Philip Falcone’s wireless venture, a financial adviser to the company in its bankruptcy testified.

Mark Hootnick of Moelis & Co. testified yesterday in Manhattan bankruptcy court that a fund manager and an attorney later found to be working for Ergen refused to answer when he tried to find out whether the Dish chairman was behind the purchases.

Ergen is facing claims in a trial before U.S. Bankruptcy Judge Shelley Chapman that he secretly amassed the debt in a bid to acquire control of LightSquared’s spectrum for Dish. Ergen contends he bought the debt as a personal investment.

“There was a strong suspicion at that time” about Ergen’s involvement in the purchases when LightSquared filed for bankruptcy in May 2012, Hootnick said. Stephen Ketchum of Sound Point Capital, who made the purchases for Ergen, “refused to answer any of those questions,” Hootnick said.

Falcone, in testimony Jan. 16, said the debt deals had him “turning over rocks” to try to find out who was behind them.

LightSquared, controlled by Falcone’s Harbinger Capital Partners LLC, is seeking to exit bankruptcy through a plan supported by Fortress Investment Group LLC (FIG:US), JPMorgan Chase & Co. and Melody Capital Advisors LLC.

Ergen Entity

Ergen had backed an alternative plan proposed by a group of lenders. In a filing Jan. 16, an entity affiliated with Ergen said it no longer wanted to be included in that plan.

A hearing is scheduled for Jan. 22 on whether the lenders may continue with the alternative proposal.

LightSquared, based in Reston, Virginia, sought to establish a high-speed wireless network. The company filed for bankruptcy in May 2012 after the Federal Communications Commission blocked its initial proposal to use wireless spectrum.

Falcone’s Harbinger invested about $3 billion in LightSquared, which listed assets of $4.48 billion and debt of $2.29 billion in its Chapter 11 filing.

The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in U.S. Bankruptcy Court in Manhattan at

To contact the editor responsible for this story: Michael Hytha at

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