By Joseph Checkler 

LightSquared filed a new restructuring plan that would put the company in the hands of current owner Philip Falcone and his Harbinger Capital Partners hedge-fund firm, as well as investment firms Fortress Investment Group LLC and Centerbridge Partners LP.

The proposal, filed early Thursday morning with U.S. Bankruptcy Court in Manhattan, marks a dramatic reversal from the last plan LightSquared filed with the court. That plan would have wiped out Mr. Falcone's stake and given a majority of the equity to Dish Network Corp. Chairman Charlie Ergen, the wireless venture's biggest creditor.

This one would pay off Mr. Ergen, who is owed more than $1 billion through his SPSO investment vehicle, with a five-year note. A group of investors owning about $1 billion in LightSquared's bank debt would also be paid off via a note.

In court Thursday, LightSquared and the bankruptcy judge overseeing the case, Shelley C. Chapman, thanked Judge Robert Drain for mediating the agreement.

While Harbinger would be the largest shareholder of the new LightSquared, a wireless venture whose network could someday provide low-cost mobile services to hundreds of millions of Americans, it wouldn't have any representation on the board of directors. Harbinger also agreed to drop its various lawsuits against several entities, including Mr. Ergen, the U.S. government and the global positioning systems industry. LightSquared will also drop its litigation against Mr. Ergen for his purchase of the company's debt.

LightSquared filed for Chapter 11 in May 2012, shortly after federal regulators refused to clear LightSquared's plans to launch its wireless network. Those regulators heeded warnings from the GPS industry that the network could interfere with GPS.

The Wall Street Journal reported late last month that Mr. Falcone was pursuing this new proposal, after a record auction for U.S. wireless spectrum suggested LightSquared's spectrum could be worth more than previously believed. Spectrum refers to the limited pockets of airwaves that mobile-phone and Internet companies use.

LightSquared isn't able to fully use spectrum that it owns without support from the Federal Communications Commission. The FCC has so far refused to grant such approval.

LightSquared said in its filing that all major creditor groups, except Mr. Ergen's SPSO, support the new proposal.

"SPSO's pattern of conduct throughout the Chapter 11 Cases suggests that it would not be supportive of any proposal that did not result in SPSO obtaining ownership and control of the Debtors' assets," LightSquared said in its filing. A Dish spokesman didn't immediately respond to a request for comment.

Willkie Farr & Gallagher LLP's Rachel Strickland, a lawyer for Mr. Ergen, said in court Thursday that her client preferred to be paid in cash.

"They believe we're easier to separately classify," Ms. Strickland said, citing the acrimony in the case between LightSquared and Mr. Ergen.

That said, she sounded optimistic that a settlement could be reached: "This could be done inside of a week if folks had the desire," Ms. Strickland added.

"It represents the most recoveries for the most parties," said Joshua A. Sussberg of Kirkland & Ellis LLP, a lawyer for the special committee in charge of LightSquared, in court Thursday.

Under the new plan, Mr. Falcone's Harbinger would own 44.4% of LightSquared's equity, with Fortress getting 26.2%, and Centerbridge 8.1%. The rest of the equity would go to current investors in a smaller piece of the company, called LightSquared Inc.

The company also said $1.25 billion in new money would be pumped into LightSquared as a springboard out of bankruptcy.

Meanwhile, LightSquared's case has gone through many machinations, some involving Mr. Falcone and some not. He and other Harbinger officials have already resigned from the company's board of directors, and won't be on the new board.

As Mr. Falcone's grip on LightSquared loosened, he sued the entities he felt were responsible for his $2 billion or so in losses on the investment. Those parties include Dish, Mr. Ergen, the U.S. government and the GPS companies that warned LightSquared's network could interfere with GPS.

All of those parties denied wrongdoing, and the suits will be dropped if this new plan is eventually approved by LightSquared's bankruptcy judge.

Write to Joseph Checkler at joseph.checkler@wsj.com

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