[ by Melanie Gretchen ]

Phil Falcone has a lot of nerve.

LightSquared Inc., the wireless venture controlled by the Harbinger Capital Partners' hedge-fund manager, owes creditors more than $1 billion.  [See our Behind the News story, "Falcone to Seek Dismissal in Fraud Suit".]  Nevertheless, or perhaps because of it, the company on Friday sought regulatory approval for a plan it believes will overcome the technical problems that have postponed its launch of a next-generation network and tipped the company into bankruptcy protection.

It can't be said Mr. Falcone wants for nothing.The last time we heard from LightSquared, in May, the company filed Chapter 11 bankruptcy and upset investors who alleged a prebankruptcy loan made to LightSquared favored Mr. Falcone and Harbinger too heavily, at the expense of other creditors.  This fall, the company appealed to the FCC in 2 filings:

• 1st filing: the company said it would use its broadband network in a way that would address concerns that its signals interfere with global positioning systems.  Specifically, LightSquared is asking the FCC to modify its license application so it can use its 5 megahertz of spectrum that haven't caused GPS concerns. It also seeks to use another 5 megahertz that it would share with federal-government users.
• 2nd filing: in the rule-making petition, the company said it would forgo using the airwaves, the "upper" 10 MHz that, that triggered those GPS interference worries in the first place.  It still wants the FCC to consider use of that 10 MHz but agreed to wait for and cooperate with "operating parameters and revised rules for terrestrial use of this spectrum."

In addition to these requests, the company will ask a judge if it can extend until at least next summer the amount of time it has the exclusive right to file a reorganization plan, without the threat of rival proposals.  Lenders objected to LightSquared's request to maintain exclusivity on the grounds that Mr. Falcone was using bankruptcy proceedings to "hold them hostage to his high stakes gamble" and their demand that Mr. Falcone sell LightSquared or pay them back.

Die Another Day? So far, Mr. Falcone has found an ally in U.S. Bankruptcy Judge Shelley C. Chapman, at least in the short term, according to people familiar with the matter.  LightSquared, which has been funded with hundreds of millions by Mr. Falcone and Harbinger, may catch a second wind yet  [C-I Note: apparently, both can weather the storm of bankruptcy and lawsuits by securities regulators for a bevy of alleged violations, including misappropriation of client money, manipulating bond prices and favoring certain clients – Mr. Falcone has said he is innocent and will fight the charges.  Why stop there?]

For further details, go to [WSJ, 9/29/12].