Investor Phil Falcone, whose Harbinger Capital Partners owns bankrupt wireless company LightSquared, said yesterday that he always intended to cut the debt claims of LightSquared's largest creditor, Dish Network Corp. Chairman Charlie Ergen, Reuters reported yesterday. LightSquared is seeking court approval of its plan to exit bankruptcy and repay creditors. The plan would pay most lenders in cash while paying Ergen in the form of a long-term note, terms to which Ergen has objected. Under intense questioning from Ergen's attorneys, Falcone acknowledged that he believed subordinating Ergen's claims would allow Harbinger to retain equity in a post-bankruptcy LightSquared. Treating Ergen's $1.1 billion claim differently from other creditors' claims would decrease the amount of new equity LightSquared would need to raise to a fund a bankruptcy exit, preserving more for Harbinger, according to Falcone. The plan would retain a roughly 30 percent equity stake for Harbinger.
