A New York judge on Monday dismissed a lawsuit brought by a group of Harbinger Capital Partners investors who accused the hedge fund and its founder Philip Falcone of misleading them about the risks of buying into mothballed satellite and LTE network operator LightSquared.
The judge ruled that some of the class action group’s claims did not prove that Harbinger Capital and Falcone failed in their duty to investors, while others were not applicable under federal securities law, Reuters reported.
The plaintiffs are now considering their options, the newsw ire said.
The ruling comes days after LightSquared won U.S. Bankruptcy Court approval for a restructuring plan that will enable it to exit from Chapter 11 bankruptcy protection.
"I am excited to get back to work, alongside our world-class leadership team, to the business of deploying our spectrum for the benefit of the American people," LightSquared CEO Doug Smith said in a statement last week, according to Bloomberg.
The restructuring plan will see LightSquared emerge from bankruptcy under the control of investment firms Centerbridge Partners and Fortress Investment Group, the report explained.
One of the big winners in the case will be Dish Network CEO Charlie Ergen, who became LightSquared’s largest creditor by buying up debt after it filed for bankruptcy protection in May 2012. Ergen made a $2.2 billion bid for the company in 2013 but backed away the following year amidst legal action against him; LightSquared accused Ergen of using illegal means to buy up its debt.
The executive bought up $1 billion of LightSquared’s loan debt and under the new plan will receive around $1.5 billion in cash, reflecting the interest accrued, Reuters said.
The ruling brings to an end almost three years of litigation surrounding LightSquared.
The company was working on a plan to roll out a mobile broadband network using LTE and satellite technology, but was stopped in its tracks in early 2012 when the Federal Communications Commission (FCC) withdrew its support for the project on the grounds that the network could interfere with satellite navigation signals. The bankruptcy filing followed a few months later.
It is not clear what LightSquared’s next step will be, but there have been various reports over the past months that the FCC will approve certain portions of its spectrum for use within the next year.
