The Wireless company LightSquared and its creditors are headed to court-ordered mediation to settle their bankruptcy plan.  The bankrupted company’s creditors include Dish Network, and they are hoping a restructured plan will help them receive the money they are due.

Judge Shelley Chapman is currently providing oversight for LightSquared’s bankruptcy and had hoped they and creditors would reach a settlement to move LightSquared out of Chapter 11.  The mediation will be facilitated by Judge Robert Drain, the judge who presided over the 2012 bankruptcy of Hostess.  Up until this point, the creditors and LightSquared had made some progress, but hit an impasse and needed mediation to reach a final settlement. 

LightSquared’s owner is accused by creditors of using underhanded means to acquire a $1 billion debt stake and attempted to create a scenario in which they would be taken over by the Dish Network.  LightSquared had hoped to restructure under their bankruptcy plan and subordinate their largest creditor, Ergen.  A plan reached earlier in the process was ruled unfair to Ergen by Judge Chapman.

Problems began for LightSquared in 2012 when US regulators revoked the company’s license to operate spectrum because there was concern about interference with global positioning systems.

The company is surviving in bankruptcy through a loan package that is due to expire on June 15, but a company lawyer recently stated it has enough cash to last it through the end of the month.  It has asked lenders to extend the maturity and is waiting on their consent.  There is a chance they would need more bankruptcy loans if mediation were to extend beyond June 30.