The hedge fund tycoon Philip A. Falcone may be down, but he’s not out, taking on the satellite television mogul Charles W. Ergen in a bankruptcy brawl.
Their months-long fight took a new turn on Tuesday as Mr. Falcone filed a lawsuit accusing Mr. Ergen of colluding with another hedge fund in a “fraudulent scheme†that prevented his broadband wireless company LightSquared from emerging out of bankruptcy.
Mr. Falcone’s complaint comes just over a week after Mr. Ergen, the chairman of both Dish and EchoStar, raised a bid for LightSquared to $2.2 billion from $2 billion.
The lawsuit, filed in the United States Bankruptcy Court for the Southern District of New York, is the latest salvo fired by Mr. Falcone, who is fighting Mr. Ergen for control of LightSquared’s assets. It has the feel of a cowboy style showdown between the two billionaires.
Mr. Falcone, who made billions through his Harbinger Capital Partners hedge fund betting against subprime mortgage market in 2007, claims Mr. Ergen secretly acquired most of LightSquared’s debt through the hedge fund Sound Capital. This allowed Mr. Ergen to bypass the company’s credit agreement which prohibits a competitor from buying LightSquared’s debt, Mr. Falcone contends.
By acquiring most of LightSquared’s debt, the complaint says, Mr. Ergen stymied efforts by Harbinger to work out with creditors a plan to pull LightSquared out of bankruptcy. The complaint also accuses Mr. Ergen of making a “low-ball, bad-faith bid†for LightSquared’s wireless spectrum through his Dish subsidiary L-Band Acquisitions.
Mr. Falcone and his Harbinger Capital Partners are seeking damages of more than $2 billion.
Mr. Ergen was not immediately available for comment.
