NEW YORK ( The Deal) -- A group of LightSquared secured lenders is trying to block Charlie Ergen's exit from a $2.2 billion asset purchase agreement.
The creditors called Dish Network's (DISH) attempt to terminate its purchase of spectrum and other assets "a desperate attempt to evade the clear and unambiguous language" of a court order, in pleadings filed Monday.
The Philip Falcone-backed wireless telecom group is low on cash, and scrambling to fund its exit from Chapter 11 protection. While LightSquared has lined up limited debtor-in-possession financing to pay for its reorganization, it has received news from regulators that would complicate its reorganization.
Dish agreed to buy spectrum and other assets of the debtor's LightSquared LP unit in July. Creditors of LightSquared LP proposed a plan to reorganize the unit based on proceeds from the deal.
Ergen's satellite TV company said in recent weeks that it will terminate the purchase because the creditors did not meet deadlines, such as obtaining court approval for their plan by Jan. 7.
The creditors argue that Judge Shelley Chapman's October order on auction rules locks in Dish until Feb. 15. LightSquared called off the auction in late 2013, when a special committee did not find the bids acceptable and chose to pursue other options.
The dispute comes as LightSquared is "essentially out of cash and teetering on the verge of administrative insolvency," the creditors said.
The telecom is attempting to finance a reorganization plan that would keep the company intact. Fortress Investment Group LLC, JPMorgan Securities LLC, Melody Capital Advisors LLC and Falcone's Harbinger Capital Partners would back the plan.