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Falcone hits Dish/Ergen with $1.5bn writ

Philip Falcone and his Harbinger Capital Partners hedge fund have filed a fresh $1.5 billion (€1.37bn) lawsuit against Dish Network and its chairman Charlie Ergen. The action revolves over the 4G ‘LightSquared’ wireless broadband service which recently emerged from bankruptcy.

Falcone’s new action echoes a similar claim filed last year which alleged that Dish/Ergen illegally stripped Harbinger of control over LightSquared during its period of bankruptcy.

The new writ was filed on July 21st at Manhattan Federal Court, and argues that the amount claimed should be tripled because it allegedly falls within Racketeering Influenced & Corrupt Organisations Act, or RICO.

LightSquared only emerged from bankruptcy on March 26th after 3 years. Harbinger at one stage prior to the bankruptcy controlled more than 82 percent of LightSquared, but the Chapter 11 bankruptcy settlement saw that reduced to a 44.5 percent holding, while control was ceded to Centrebridge Partners and Fortress Investment Group.

LightSquared received investment cash from Harbinger of some $2.9 billion, and together with other debt finance funded the launch of the SkyTerra 1 satellite launched in November 2010. However, the terrestrial ground segment of the scheme has created headaches for the FCC which argues that the spectrum is too close to that of GPS and was subject to “significant interference concerns”.

LightSquared services are in use today, and the company claims “hundreds of thousands of devices” operate via the LightSquared system.

LightSquared ended its Chapter 11 bankruptcy with a ruling from the Court that it must repay its largest creditor, Dish Network chairman Charlie Ergen, in full. Ergen had personally acquired about $1 billion-worth of the company’s loan debt, and the final bill was about $1.5 billion reflecting interest due on the notes.

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