LightSquared, Creditors Hold Debate On The Definition Of 'Independence'

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The hedge funds that LightSquared owes money to, notably Dish Network Chairman Charlie Ergen's personal hedge fund, are quite eager to force LightSquared to accept Dish's bid for its assets. This would have the salutary effect of (a) ensuring that they all make a huge profit on debt they paid pennies for, (b) humiliating and possibly bankrupting Phil Falcone, and (c) giving Dish the extra spectrum it wants (while also making Charlie Ergen even richer).

So imagine their surprise when LightSquared named one of the many people who have had rough dealings with Charlie Ergen in the past to the special committee that will handle the auction of the aforementioned assets. Well, they have told a bankruptcy judge, this kind of stacking the deck simply won't do. It might keep Charlie Ergen's careful stacking of the deck from working.

The lenders in bankruptcy court papers claim the director, Donna Alderman, isn't independent because she previously sparred with Dish Network Corp., which is offering $2.22 billion for LightSquared….

The lenders on Monday said in the court papers Ms. Alderman was fired by satellite company DBSD North America Inc. after Dish purchased it out of bankruptcy proceedings in 2012. Ms. Alderman then sought $7 million from Dish for her work as a senior manager and a board member at DBSD leading up to the sale, the lenders said.

Dish refused to pay the $7 million, telling Ms. Alderman she wasn't entitled to the compensation, and said she would be provided with $750,000 in severance, according to the lenders, emails and people familiar with the matter. Ms. Alderman on April 26, 2012, told Dish lawyers she was "being screwed by Dish," according to an email reviewed by The Wall Street Journal….

In court papers filed on Monday, LightSquared said it was "inevitable" that Ms. Alderman would have some previous interactions with "at least some of the interested parties" in the company's bankruptcy case given the small-community nature of the media and telecommunications industry. LightSquared said it was satisfied with Ms. Alderman after questioning her about potential conflicts or biases….

On April 26, she emailed the general counsel and said she was "extremely disappointed in this result, and more specifically in Dish."

She added: "One day, you may want to consider adding the element of 'doing the right thing' to the repertoire. You will find that it makes winning much better."

LightSquared Lenders Object to Independent Committee's Board Selection [WSJ]

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LightSquared Creditors Seek Permission To Go After Mrs. Phil Falcone's Shoe Collection

Remember Phil Falcone? Hedge fund manager about yea high? Cuts his hair like he's still playing professional hockey? Is betting the farm on a company called LightSquared that "seeks to create connectivity for all" but in doing so might "cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation" and filed for Chapter 11 bankruptcy last May? Anyway, LightSquared's creditors were in court today asking for the right to go after Big Phil/Harbinger, who they believe screwed them big time.

Bonus Watch '13: LightSquared

LightSquared is a wireless venture that seeks to create "convenient connectivity for all." Unfortunately, as the Wilbur Falcone fans among us know, it's looking like it'll be a dark day in hell before that happens, on account of bunch of forces working together to shut this thing down at every turn, including but not limited to the yachting community that claims GSP interference caused by LS will result in boats getting lost at sea; the National Oceanic Atmospheric Administration, which has said LightSquared "may degrade precision services that track hurricanes, guide farmers and help build flood defenses"; and the FAA, which recently put out a study estimating LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” Also not helping is that LightSquared filed for bankruptcy in May, the company is blowing through cash faster than Wilbur's Studio 54 days, and senior executives won't stop quitting. While some people might take stock of the situation and decide, at this point, to throw in the towel, Wilbur Falcone's benefactor is not some people. He's making this thing work if it's the last thing he does. So, what to do? Obviously a couple of miracle workers are going to be needed and the thing about miracle workers is that they don't come cheap. Gotta spend money to make money. Troubled wireless-satellite company LightSquared wants permission to dole out up to nearly $6 million in cash bonuses to four of its top employees, including its interim chief executive. Recent months have seen LightSquared burn through money--it has spent $134.3 million since filing for bankruptcy in May, according to its most recent monthly operating report, and executives alike. In court papers filed Wednesday, LightSquared said four senior executives have left the company in the past six months, including its former chairman of the board and CEO. The company wants to make sure four "irreplaceable employees" stick with the company as it attempts to claw its way out of bankruptcy protection and help to make the reorganization as fast and cheap as possible. LightSquared's bonus proposal paves the way for a "total possible cash payout of approximately $5.985 million" over two years, according to a filing with the U.S. Bankruptcy Court in Manhattan. Four employees--interim CEO, president and chairman of the board Douglas Smith; Chief Financial Officer Marc R. Montagner; general counsel Curtis Lu; and its executive vice president, regulatory affairs & public policy Jeffrey Carlisle--would be eligible for incentives consisting of cash and restricted stock units paid in shares of the company's current common stock. If the executives satisfy cash preservation goals, make progress in LightSquared's efforts to resolve certain regulatory issues and emerge from bankruptcy by the end of 2013, they'll receive vesting of all issued stock and "aggregate incentive payments of cash up to 285% of each such key employee's annual salary," LightSquared said. Hitting less aggressive goals, like exiting bankruptcy by the end of June 2014, would come with smaller payouts, like a cash bonus equal to 100% of the executives' annual salary, in the case of the mid-2014 bankruptcy exit. Mr. Smith currently makes $700,000 annually; Mr. Montagner and Mr. Lu $500,000 each; and Mr. Carlisle $400,000. LightSquared said each of the employees "provides critical services, drives performance, and impacts LightSquared's ability to enhance value in the Chapter 11 cases." The group has also had to take on extra work recently, as more and more employees have left LightSquared both voluntarily and involuntarily. The company said its total employee headcount has dropped by 60% in the last six months. The bonus plan aims to motivate the company's leaders to manage its businesses and working capital effectively and maximize the value of the estate for the benefit of all stakeholders, LightSquared said. LightSquared Seeks to Pay Key Executives up to $6M in Bonuses [DowJones]