Judge Rejects LightSquared Director, Citing Possible Conflict of Interest

A bankruptcy judge told LightSquared to remove a director from a special committee formed to help oversee the sale of the wireless-satellite company, agreeing with lenders that the director's previous relationship with would-be buyer Dish Network could be viewed as a conflict of interest.

"Frankly, I don't understand it," Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan said of the selection of Donna Alderman as an independent director for the committee. LightSquared lenders said in court papers that Alderman earlier sparred with Dish over how much it owed her after a 2012 acquisition she helped negotiate. "There is a history here that has been brought to light that you obviously were aware of and she is aware of," said Judge Chapman to a lawyer for LightSquared. Alderman was fired by satellite company DBSD North America Inc. after Dish purchased it out of bankruptcy proceedings in 2012, the lenders on Monday said in the court papers. She then sought $7 million from Dish for her work as a senior manager and a board member at DBSD leading up to the sale, the lenders said. The company instead said she would be provided with $750,000 in severance, according to the lenders, emails and people familiar with the matter.