By Joseph Checkler 

NEW YORK--LightSquared's bankruptcy judge on Friday ordered Dish Network Corp. to turn over emails with specific search terms from Chairman Charlie Ergen and other Dish employees to a group of hedge funds fighting Mr. Ergen's status as a LightSquared creditor.

Judge Shelley C. Chapman said Dish must turn over documents with the letters "LS," for LightSquared, and several versions of the word "terminate" from April 2013 until now. The judge turned down the hedge funds' request for other searches, including the words "auction" and "bid" related to Dish's $2.2 billion offer for LightSquared's spectrum assets abandoned earlier this year.

Dish lawyer Brian T. Frawley of Sullivan & Cromwell LLP said the company didn't think anything provocative would be turned up in the emails but complained about the process of the search.

"I'm worried about wasting the time reviewing a lot of documents," Mr. Frawley said. Judge Chapman responded, "Can't help you with that."

The fight between the hedge funds and Mr. Ergen, once allies in the case, has escalated since Dish abandoned its bid. Later in the hearing, Dish argued over its own requests for discovery, saying it needs documents with more than 100 terms from LightSquared.

Along with LightSquared, the hedge funds are trying to prove that Mr. Ergen bought LightSquared debt improperly on behalf of Dish, a competitor that was prohibited from buying it. They say the purchases were part of a "scheme" to gain control of the debt to make it easier for Dish to buy LightSquared. If successful, Mr. Ergen's claims in the case could be disallowed or pushed behind those of other creditors. LightSquared is also trying to get its latest reorganization plan approved by the court, a proposal that would theoretically pay Mr. Ergen in full for his $850 million in debt owned, but give him a "third-lien" note rather than cash. The hedge funds, who own a large chunk of that bank debt, would get cash under the plan.

The new LightSquared restructuring proposal, backed by Fortress Investment Group LLC, is scaled down from a $4 billion Fortress-led reorganization that LightSquared abandoned earlier. It calls for a $1.65 billion loan while the company is in bankruptcy proceedings and then a fresh $1 billion loan to finance the company once it exits Chapter 11.

The new plan isn't contingent on regulatory approval, a key difference between this and the prior Fortress-led proposal. Therefore, the plan requires less funding because LightSquared would emerge from bankruptcy proceedings much sooner than under the prior one.

Phil Falcone's Harbinger Capital Partners, which currently controls LightSquared, would participate in the new financing and retain an equity stake. Harbinger would own about 36% of LightSquared's equity if this proposal gets approved.

LightSquared filed for protection from creditors in May 2012 after federal regulators refused to clear its plans to launch a wireless network, which they said could interfere with global-positioning systems. Its previous proposals all were contingent on the Federal Communications Commission approving modifications to LightSquared's network, which the agency has said isn't imminent.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

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

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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