A U.S. Bankruptcy Court judge ruled on Tuesday that LightSquared can push ahead with its lawsuit against Dish Network (Nasdaq: DISH) and Chairman Charlie Ergen over his acquisition of LightSquared debt before Dish bid on the wireless company's assets.
Ergen is no stranger in the courtroom but he is usually the one doing the suing. Ergen and Dish wanted LightSquared's notion dismissed but Judge Shelly Chapman of the U.S. Bankruptcy Court in Manhattan allowed the suit to move forward. That means LightSquared can argue before the court that Ergen bought the beleaguered company's debt on behalf of Dish and not himself. Such purchases would have been illegal under LightSquared's credit agreement, which prohibited competitors from buying the debt.
The judge's ruling won't affect today's scheduled auction for LightSquared's spectrum assets. Dish already has a $2.2-billion offer on the table, making it the lead bid for a large portion of LightSquared's spectrum.
LightSquared filed for bankruptcy protection in May 2012 after the U.S. government said the company's network could interfere with global-positioning systems, causing the FCC to suspend LightSquared's license to use a terrestrial network to supplement mobile services. But the commission is now considering whether to approve LightSquared's application to share some of the government's spectrum and modify its licenses, which company officials claim would make the company much more valuable than Dish's current bid.
For more:
- see this WSJ article (sub. req.)
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