Judge Approves LightSquared’s Restructuring Proposal

US Bankruptcy Judge Shelley Chapman approved the restructuring plan of LightSquared, capping a bankruptcy odyssey for Philip Falcone’s ambitious wireless venture that filed for bankruptcy nearly three years ago.

Judge Chapman signed off on the plan, which pays off top lender Charlie Ergen in cash and puts LightSquared in the hands of investors including Fortress Investment Group LLC and Centerbridge Partners LP, saying it was fair to creditors. When the plan goes into effect, LightSquared will be owned by investors including Centerbridge, Fortress and a unit of J.P. Morgan Chase & Co. Falcone and his Harbinger Capital will keep more than 44% of the equity, although Harbinger won’t have a say in day-to-day operations. But the reorganized LightSquared won’t include Dish and Ergen, who have amassed a vast pile of valuable wireless spectrum assets in recent years.

Getting Ergen out of its capital structure has long been a goal of LightSquared, ever since he abandoned his bid to buy the company’s valuable spectrum assets early last year. Ergen has consistently said he wants cash for the money he is owed, which is more than $1.4 billion including interest. Now he will get it, even as a group of investors that own the same type of bank debt owned by Ergen get new second-lien notes.