By Joseph Checkler 

A judge on Thursday said some of Dish Network Corp. Chairman Charlie Ergen's nearly $1 billion in claims in LightSquared's bankruptcy case will be subordinated below those of other creditors.

Judge Shelley Chapman of U.S. Bankruptcy Court in Manhattan said the amount that will be subordinated is "to be determined."

The wireless venture had said Mr. Ergen improperly bought his claims on behalf of Dish as part of a plan to ease LightSquared into Dish's hands, and the judge essentially agreed. Mr. Ergen has denied that allegation, saying he made the purchases for himself via his SP Special Opportunities, or SPSO, investment vehicle.

The judge said that while Mr. Ergen's investment vehicle was "not technically prohibited" from buying LightSquared's bank debt, he made "an end run" around a credit agreement.

"Mr. Ergen found a loophole in the express terms of the credit agreement and exploited it," Judge Chapman said. "SPSO was essentially a front used by Mr. Ergen."

A spokesman for Dish declined to comment.

While concluding that at least some of the purchases were "carried out for the benefit of Dish," Judge Chapman refused to cancel the debt entirely, citing the Bankruptcy Code. She also refused to award damages to LightSquared and its main equity holder, Philip Falcone, because they failed to go after Mr. Ergen for the purchases until it was "too late in the game."

Dish had bid $2.2 billion for a large swath of LightSquared's wireless spectrum, but dropped that bid earlier this year, citing an undisclosed technical issue regarding LightSquared's network.

Judge Chapman was reading her rulings in court on Thursday on both the trial over Mr. Ergen's claims and later on whether to approve LightSquared's $2.65 billion restructuring plan. The plan, led by Fortress Investment Group LLC, would allow Mr. Falcone and his Harbinger Capital Partners hedge-fund firm to keep at least a 35% equity stake in the company. The two rulings are related because Mr. Ergen has fought his treatment under the plan.

The plan calls for his nearly $1 billion in bank debt to be paid back over seven years, via a note. Mr. Ergen wants to be treated like other holders of the same debt, who would get paid in cash in full. Now that some of his debt will be subordinated below other creditors, it is unclear how the plan might change.

LightSquared 's main asset is spectrum, the limited pockets of airwaves that mobile-phone and Internet companies use.

LightSquared filed for Chapter 11 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 restructuring proposals all were contingent on the Federal Communications Commission approving modifications to LightSquared's network, which the agency has said isn't imminent. LightSquared has touted the fact that the newest Fortress proposal isn't contingent on such stringent regulatory conditions.

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

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