Forward Motions: LightSquared to Defend Bankruptcy-Exit Plan

LightSquared’s latest attempt to get out of bankruptcy protection will begin on Monday morning.

Bankruptcy lawyers for hedge fund manager Philip Falcone‘s wireless venture will try to persuade Judge Shelley Chapman in U.S. Bankruptcy Court in New York to let them to put the company’s reorganization plan into action.

The company has gone through several proposed restructuring plans, but all have fallen through. And the latest proposal already has a challenger: hedge fund Solus Alternative Asset Management LP.

Solus officials have argued that their own proposal for the company’s future—a plan to pump $2 billion into the project—is better than the one the company has presented, which involves little new money and puts the company in the hands of investors including Centerbridge Partners LP and Fortress Investment Group LLC.

While Solus’s plan would put itself in charge of the company, it would let Mr. Falcone’s Harbinger pick one of the board members. LightSquared’s restructuring plan would have given Harbinger no board seats, and in fact, Mr. Falcone and other Harbinger officials have already resigned from the company’s board.

LightSquared filed for bankruptcy in May 2012 after federal regulators refused to clear the company’s plans to launch its wireless network. Those regulators heeded warnings from the GPS industry that the network could interfere with GPS.

LightSquared isn’t able to fully use spectrum that it owns without support from the Federal Communications Commission, and the agency has so far has refused to grant such approval.

On Wednesday, officials at surgery-monitoring company ProNerve LLC could get clearance to hold a bankruptcy auction on March 27 to see if any buyers will top a $35 million lead offer for the company.

Founded in 2008 in a Denver suburb, ProNerve provides monitoring services to ensure doctors don’t damage a patient’s nervous system during surgeries and other delicate medical procedures. The 200-person company and its technology assisted 25,000 patients last year but filed for bankruptcy on Feb. 24 after at least three years of losses.

Potential buyer SpecialtyCare IOM Services LLC has already taken on $43.2 million in debt that ProNerve owes to a lender. Under its bid, SpecialtyCare has agreed to help fund ProNerve ’s bankruptcy with a $2.5 million loan and forgive some of that debt.

ProNerve’s auction timeline and rules still need court approval, which could be granted by Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., at Wednesday’s hearing.

Bidders have until Wednesday to put in offers for some of U.S. Coal Corp.’s coal mining operations in eastern Kentucky.

That’s the bid deadline for one of the company’s divisions in central Appalachia, which sits atop an estimated 26.3 million tons of coal reserves and is up for sale at a March 19 bankruptcy auction.

Company officials have already reached out to more than a dozen potential buyers for the division’s operations, which use a 300-ton-per-hour coal preparation factory built in 2008, according to documents filed in U.S. Bankruptcy Court in Lexington, Ky. U.S. Coal officials said the division is expected to lose money “due to the continuing downturn in the market price for coal.”

The company hasn’t set a minimum bid price for the division, which the company bought in 2007 for about $33 million, court papers said.

The company laid off dozens of workers before its bankruptcy proceedings, which began on May 22 with an involuntary petition filed by unpaid creditors against one of U.S. Coal’s subsidiaries. The company listed about $75 million in debt and employed about 290 workers at the time, according to court documents.

In earlier court papers, Chief Executive John Collins blamed the company’s hardship on the drop in demand for coal that happened after natural gas became cheaper.

-Sara Randazzo contributed to this article.

Write to Katy Stech at [email protected]. Follow her on Twitter at @KatyStech