Billionaire investor Phil Falcone and satellite guru Charlie Ergen will finally come face to face in their battle over LightSquared.
The two will square off in court this week for the first time since it became clear that Ergen is trying to wrest control of the bankrupt wireless provider from founder Falcone.
A Manhattan federal bankruptcy judge will hold a hearing on Wednesday tied to Falcone’s arguments that he should get more time to come up with a restructuring plan for LightSquared. His lawyers have argued that Ergen — a competitor — has been secretly buying up LightSquared’s debt as part of a ploy to scuttle the reorganization and buy LightSquared’s assets on the cheap.
If Judge Shelley Chapman agrees, then Ergen could be blocked — at least temporarily — from pushing a rival bid for LightSquared’s assets.
Ergen, the chairman of satellite-TV provider Dish Network, has been slapped before in bankruptcy court.
Ergen was penalized for a similar conflict of interest in his 2009 bid to take control of bankrupt satellite operator DBSD North America.
Dish’s status as a competitor drew controversy and the judge in the case ultimately ruled that Dish had an “ulterior motive” and disqualified it from voting on the company’s restructuring.
Ergen appealed the ruling and lost before eventually winning control of DBSD with a $1.4 billion deal in 2011.
Falcone’s exclusive right to propose a reorganization for LightSquared ends Monday, giving Ergen free rein to make an offer. He’s expected to bid $2 billion for certain LightSquared assets.
Falcone will miss the deadline, but he’s betting he can persuade the judge to grant him more time, a source told The Post.
One analyst believes Falcone could succeed, calling DBSD “something of a precedent.” Falcone’s hedge fund, Harbinger, could “convince the judge to at least penalize Ergen by not allowing him to force the auction right now.”
If that happens, Falcone will need to raise as much as $3 billion to pay off all of LightSquared’s creditors.
As The Post exclusively reported last week, Falcone is mulling a $2 billion restructuring that would pay back everyone — except Ergen, who holds $1 billion of LightSquared bank debt.