Justice Department questions feasibility of LightSquared bankruptcy exit plans
The US Department of Justice's Trustee Program on Friday questioned the feasibility of four restructuring plans for LightSquared. The said plans were put forth by the bankrupt wireless broadband developer and its creditors before the US Bankruptcy Court in Manhattan, Reuters said in a report. According to a court filing by DOJ's bankruptcy watchdog, the LightSquared plans would provide third parties with overly broad releases from potential legal claims.
LightSquared filed for Chapter 11 protection in 2012 after the Federal Communications Commission barred its planned national wireless broadband network, the report said. The company had been fighting to keep control of its valuable spectrum assets amid a takeover push by satellite service provider Dish Network Corp, Reuters said.
According to the report, three creditor groups have proposed plans that contemplated an auction for the assets. Dish had already made a baseline offer of USD2.2 billion.
Meanwhile, a fourth plan proposed by Harbinger Capital Partners would restructure LightSquared without an auction and with Harbinger maintaing control. Harbinger is the company's majority owner, Reuters said.
The Trustee's office told Reuters that LightSquared's plans could be seen as protecting third parties. The plans also suffer FCC regulatory problems, the Trustee's office added.
The objection will be considered at a hearing set on December 10, Reuters said.