Pending Bankruptcy Reorganization Plan Seen Stalling FCC Decision on LightSquared Modification Proposal
The FCC will likely need to wait until LightSquared has a designated owner before taking any action on the company, observers said. With three new reorganization plans on the table in LightSquared’s bankruptcy proceeding, the company’s effort to find a solution could continue through November, a satellite industry professional said. The three options emerged this month after a previous stand-alone plan from Fortress Investment Group, Harbinger Capital Partners, JPMorgan Chase and Melody Capital Partners fell through, the professional said. A confirmation hearing is set for Oct. 20 in the U.S. Bankruptcy Court in New York, the court said in an order this month.
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The confirmation hearing is expected to go through the end of October, but it may continue to early November, the satellite professional said. LightSquared and Harbinger each submitted a plan, and a third plan comes from Mast Capital Management, court filings said. Additional plans could be submitted by Oct. 20, the satellite professional said. LightSquared entered Chapter 11 proceedings in May 2012, and this year Harbinger filed two complaints against Dish and its chairman Charlie Ergen, and one complaint against the government (CD July 15 p18).
It’s not harmful that the FCC can’t do anything yet, said Tim Farrar, an independent satellite analyst. But, it could be problematic if Harbinger owns LightSquared, he said. It would probably be impossible for the FCC to rule in favor of LightSquared if Harbinger were still trying to sue the agency, he said. Harbinger alleged in the U.S. Court of Federal Claims that the FCC’s revocation of LightSquared’s conditional waiver breached a contractual commitment to allow LightSquared’s spectrum to be built out for mobile broadband use.
The prolonged litigation shouldn’t delay any of the substantive testing or the technical work being done to arrange for appropriate spectrum swaps, said former FCC commissioner Robert McDowell, who has done some consulting for LightSquared this year. In the long term, the commission “will likely want to know who is going to be in control ultimately of the licenses before it authorizes any license transfers,” he said. But, the interference concerns aren’t affected by who will own the license, he said.
The plans from Harbinger and Mast involve splitting up the company’s assets, while the LightSquared plan keeps LightSquared LP and LightSquared, Inc. together, the satellite industry professional said. The license modification proposal at the FCC is focused on using the 1670-1675 MHz spectrum and the L-band spectrum, the professional said. LightSquared completed a report this year saying wireless operations can be conducted in that band along with earth stations operated by the National Oceanic and Atmospheric Administration (NOAA) (CD April 16 p9): “The value of the spectrum is higher if kept together.” LightSquared would require that all investors give up their rights to sue, “which would nullify Harbinger’s right to sue,” the professional said. Any breakup of the company would be “immensely complicated,” Farrar said.
The litigation hasn’t affected any of LightSquared’s ongoing relationships with stakeholders or the agencies, the satellite industry professional said. A NOAA spokesman didn’t say whether the agency supports LightSquared’s findings on sharing spectrum. LightSquared hired Alion to work with it and NOAA on the testing, he said in an email. NOAA supports President Barack Obama’s commitment to spectrum sharing and freeing up spectrum, “and we do not support one company over another,” he said. The FCC had no comment.
Between now and the confirmation hearing, other plans that are filed and other deals made could affect whether the litigation proceeds, the satellite professional said. Harbinger and an attorney for Ergen didn’t return a request for comment. (klane@warren-news.com)