This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

LightSquared Denied Plan Confirmation

NEW YORK (The Deal) -- The lengthy battle between Philip Falcone's LightSquared and Charlie Ergen was assured of another act Thursday, May 8, when the wireless spectrum company failed to win confirmation of its reorganization plan.

Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan called the plan a "gerrymandered end-around" that unfairly discriminates against the approximately $1 billion in claims held by Dish Network Corp. chairman Ergen. Chapman gave the parties until May 27 to reach a deal on a consensual plan or she would appoint Judge Robert D. Drain of the bankruptcy court as plan mediator.

LightSquared had sought to confirm the plan, based on a $2.65 billion exit financing package from Fortress Investment Group and others that have paid all creditors in full. Most would have received quick payments in cash, but Ergen's claim, the largest in the case, would have had payments delayed by seven years.

Chapman read her opinion over the course of four hours on Thursday afternoon for the benefit of parties involved, she said, so they would not have to wait for an official written ruling. That opinion will come as the parties attempt to negotiate.

"Treatment afforded in the plan doesn't pass muster," Chapman said. "This is treatment that, even if possibly yielding payment of the claim seven years down the road, puts [Ergen] at the mercy of a proposed post-confirmation capital structure."

That structure remains unclear and is one of the sources of the plan's problems, Chapman said. Various valuations by different parties have put the debtor's value somewhere between $4 billion and $13 billion, a figure too unstable to support the argument the Reston, Va., company can pay Ergen in seven years. In addition, much of the debtor's value will depend on unpredictable approvals from the Federal Communications Commission.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.42 1.26%
FB $80.41 1.07%
GOOG $555.48 2.13%
TSLA $207.19 1.68%
YHOO $44.45 0.04%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs