The mediation process seeking to resolve the outstanding debt structure of Harbinger Capital Management as it emerges from bankruptcy appears to be headed for success – no thanks to Harbinger’s largest creditor, who was specifically admonished by the federal judge overseeing the proceedings.

Charles Ergen, founder of Dish Network and current manager of the SP Special Opportunities hedge fund, bought $1 billion worth of debt owed by LightSquared, a wireless Internet company created by Harbinger.  Despite being the largest creditor involved, Bankruptcy Judge Robert Drain is prepared to move forward without his support, writing that Ergen and his fund ‘have not participated in the mediation in good faith and have wasted the parties’ and the mediator’s time and resources.’

Judge Drain noted specific instances of Ergen’s lack of cooperation, noting one session when Ergen left the proceedings without permission and another where he sent his wife as his proxy.  The other involved parties all attended the mediation sessions as expected.

LightSquared has secured further funding as it emerges from bankruptcy and expects to receive FCC approval for and licensing very soon.  The new funding is surprising to many, seeing as the company has already spent $1 billion with little to show for it aside from a bankruptcy filing and mediation.  For Ergen’s part, despite his public disapproval of the decision and the possibility that his purchase of the debt may be found to have been illegal in the first place, he may have no recourse once the judge renders his decision.