The Chairman of Dish Network Corporation, Charlie Ergen, made the decision to sue Philip Falcone, the shareholder of LightSquared. The lawsuit stems from Falcone’s mishandling of the bankruptcy case that was ongoing. The filing of the lawsuit took place on Friday, according to the Wall Street Journal.
The lawyers who are currently representing Ergen have made statement that Falcone has been relying on the Chapter 11 bankruptcy case as a way of stalling while the company awaits approval for the wireless version of its network. Ergen is expecting Falcone to toss up millions of dollars because Falcone did not pursue a bid that came straight from Dish. Dish put in a bid worth $2.2 billion in hopes of receiving the assets that belong to LightSquared.
Ergen’s lawyers also claim that Falcone made decision on his own when he was not supposed to do that. It has been stated that decisions were supposed to be made by a committee of the LightSquared board who would all work together to decide which outcome is the best for LightSquared. However, Falcone claims that he was dealing predominantly with investors who had an interest in LightSquared.
A spokesperson for LightSquared did not comment on whether or not these claims in court were completely true. A lawyer who is representing Falcone, David Friedman, would also not comment on the case.
Falcone currently has the most control over the equity of LightSquared. While he does have the most control, Ergen’s lawyers claim that he is basically taking a gamble, and risking the possibility of a major loss instead. The lawsuit has occurred during a difficult time for the LightSquared bankruptcy case. While awaiting to have the plan approved, the company itself has filed a lawsuit against Ergen, stating that he bought out debt in order to get LightSquared to Dish based on the bid.
Ergen denies these statements and claims that he only bought the debt out for his own investments. Even though he has denied buying the debt for Dish, many believe that it was his sole purpose with every intention to allow Dish to buy LightSquared, which is something the company did not want since it is a competitor against Dish.
Ergen feels the current treatment he is receiving from the company is not fair and continuously denies any wrongdoing. The Judge that is handling the current case, Shelley C. Champan, will have to make the decision on whether or not the new proposal should be approved. Judge Champan will also need to decide how to deal with the claims that have been made against Ergen.
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