Bankrupt wireless venture LightSquared and its largest creditor, Dish Network Corp (NASDAQ:DISH) Chairman Charles Ergen, have resolved a long-running dispute over Ergen’s treatment under LightSquared’s proposed restructuring.
According to court papers filed on Monday in U.S. Bankruptcy Court in Manhattan, the sides reached a deal after extending a previously-completed mediation session.
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An agreement would resolve more than a year of fighting between the parties, and could obviate the need for a second major trial scheduled for later this summer. While the filing gave no details on the deal, a hearing was scheduled for Monday afternoon in the Manhattan court.
LightSquared, owned by Phil Falcone’s Harbinger Capital Partners, went bankrupt in 2012 after the Federal Communications Commission revoked its license to operate its spectrum amid fears of GPS interference.
Ergen later acquired about $1 billion of LightSquared’s senior loan debt, leading the company to accuse him in a lawsuit of trying to surreptitiously gain control of the company.
Judge Shelley Chapman sided with LightSquared in the lawsuit, but still rejected the company's plan to reorganize by subordinating Ergen's debt, saying the plan went too far. After a failed mediation, Ergen also opposed a second LightSquared restructuring proposal that would have subordinated a piece, but not all, of his debt, and vowed to litigate again.
Monday's announcement would appear to signal peace between the parties.