LightSquared is the broadband wireless company that filed for Chapter 11 in May. Phil Falcone is the Harbinger Capital founder who owns a majority interest in LightSquared. In June, the Securities and Exchange Commission charged Mr. Falcone with arranging to borrow $113.2 million from Harbinger against the advice of Harbinger’s then-operating chief and two lawyers. In July, The Wall Street Journal reported that Mr. Falcone planned to defend himself by “deflecting blame to a former Harbinger operating chief and two lawyers.” We mention these things because Mr. Falcone is feeling stubborn about a legal matter. From Dow Jones:
LightSquared’s lenders says Philip Falcone’s Harbinger Capital Partners won’t hand over documents they are requesting as part of an investigation over whether they can pursue claims against Harbinger and the wireless satellite company.
In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, lawyers for a group of LightSquared lenders owed more than $1 billion said it “appears” LightSquared received “preferential” loans last summer without any investment by Harbinger, which owns most of LightSquared’s stock and has four of the company’s six board seats.
The lender group says it has the right to subpoena Harbinger as part of its June agreement to allow LightSquared to use cash secured by its loans. But Harbinger, it says, has refused.
“Harbinger’s basis for its blanket refusal is that ‘as these cases progress, it will become clear that sufficient value exists to pay all creditors in full under a Chapter 11 plan,'” said the lenders, whose loans are secured by all of LightSquared’s assets.