Lender says LightSquared disclosure statement incomplete, inadequate

By Jim Witters

Wilmington, Del., Oct. 4 - LightSquared Inc.'s proposed Chapter 11 plan cannot succeed and the disclosure statement associated with the plan fails to disclose key information that creditors need to cast informed votes, a potential lender says in documents filed Oct. 4 with the U.S. Bankruptcy Court for the Southern District of New York.

Centaurus Capital LP has committed to participate in the postpetition and exit financing described in the plan submitted in September by Harbinger Capital Partners, LLC.

Centaurus believes that plan "will result in a return to stakeholders superior to that provided by any of the sale plans," according to the documents.

Centaurus says the proposed asset sales that underpin the other proposed plans "are currently structured in a way and on a time frame that does not work legally or practically, and the plans with which they are associated cannot be confirmed without significant changes."

In its filing, Centaurus objects to

· The adequacy of four separate disclosure statements;

· A motion by the informal secured group of LightSquared LP lenders;

· A motion by U.S. Bank NA and Mast Capital Management, LLC; and

· The motion by the debtors to approve the disclosure statement.

The sale plan put forth by the informal lender group "would trigger a change of control prior to obtaining Federal Communications Commission approval, violating applicable law and precluding confirmation," the filing states.

In addition, Centaurus says

· The sale plan disclosure statements do not explain that they contemplate the transfer of property of debtors that are not parties to the agreements and are not covered by the related plans;

· The sale plan disclosure statements fail to disclose that there will be a need for additional postpetition liquidity after the end of the year, when current debtor-in-possession financing and cash collateral arrangements expire;

· The sale plan proponents do not disclose the substantial increase in value that will be realized upon approval by the FCC of the debtors' pending license modification requests; and

· The sale plan disclosure statements do not "quantify the loss - likely to be measured in terms of billions of dollars - that will be suffered by the estates and stakeholders in the event a sale closes before the regulatory process is complete."

A hearing on the adequacy of the disclosure statement is scheduled for 11 a.m. ET on Oct. 9.

LightSquared is a Reston, Va.-based wholesale-only 4G-LTE network integrated with satellite coverage. The company filed for bankruptcy on May 14, 2012 under Chapter 11 case number 12-12080.

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