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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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