Two sources said that billionaire investor Carl Icahn and others had been buying some of LightSquared's debt.

These investors could be jockeying for position in case the company files for bankruptcy, according to two sources. But these people said there was no indication so far that the company was considering bankruptcy.

Activist investor Icahn is flexing his muscles as LightSquared, largely bankrolled by Falcone's Harbinger Capital Partners, faces big obstacles in winning regulatory approval to build a fourth-generation broadband network. And the company may be running out of cash, according to a financial statement obtained by Reuters last year.

Since the approval process has run into obstacles and is taking longer than LightSquared had expected, the concern is whether the company has enough money to tide it over.

LightSquared said earlier this week that it has enough cash for "several quarters." But at least one of its partners, Sprint Nextel, has put pressure on it to win regulatory approval by the end of January.

As a result, LightSquared is examining other options, the sources said.

One option includes the potential for selling its right to certain spectrum leases, according to three sources familiar with the matter. Two of these people said that Falcone has told investors he was talking to prospective buyers to gauge their interest in buying the assets .

These people said that it was not clear how much money Falcone hoped to raise in a spectrum auction or whether such a deal could even succeed.

One source said that LightSquared is also looking into is whether it can renegotiate its contracts with partners including Sprint and Inmarsat.

LightSquared was not immediately available for comment on these options or whether it was considering bankruptcy. Earlier on Friday, the company declined to comment on Icahn.

Icahn, a veteran corporate raider who has battled corporate chiefs at companies like Genzyme and Biogen for decades, quietly purchased a big chunk of LightSquared's loans when hedge fund Farallon Capital Management sold $300 million of the debt late last year, the sources said on Friday.

Hedge fund manager David Tepper's Appaloosa Management and Andrew Beal's Beal Bank bought the rest, the sources said.

Additionally, as others have gotten out of LightSquared debt over the last few months, Icahn has stepped in, one of the sources said.

Icahn declined to comment on the matter, first reported by Debtwire.

A week ago, nine federal departments and agencies, including the Joint Chiefs of Staff and NASA, said LightSquared would interfere with GPS and satellite networks that keep commercial airliners and military ships on course.

That news came after the company acknowledged, in the financial statement seen by Reuters, that it might not be able to "continue as a going concern" in 2012 unless it raised more capital and financing.

The wireless company has $4.64 billion of assets. Its most valuable assets are its licenses to operate in various broadcast spectrums -- something that might be of interest to managers currently snapping up the debt. LightSquared values those licenses at $2.44 billion.

As its financial outlook dimmed, the price of LightSquared's debt tumbled to about 50 cents on the dollar from about 100 cents, where it traded only six months ago.

The dramatic drop in price in the company's debt has made the loans extremely attractive to people like Icahn, who has recently relied more on distressed debt investing to help shake up management and push up companies' shares. Icahn declined to comment on LightSquared.

Icahn's involvement with Lightsquared pits him against Falcone, putting two of the $2 trillion hedge fund industry's most colorful managers into the same ring again after they faced off before in an Atlantic City casino deal.

"Carl is certainly entitled to his opinion, as I am entitled to disagree with it," Falcone said in an email, replying to a Reuters query.

Falcone soared to fame on a bet against the overheated housing market in 2007, when assets in his Harbinger Capital Partners surged to about $26 billion. Since then his assets have tumbled to about $5 billion amid up and down performance and his effort to re-vamp the portfolio by putting more than half of the assets into LightSquared, a move that angered many investors.

LightSquared's money problems and a possible showdown with Icahn, one of the world's best known corporate raiders, are the latest headaches for Falcone, who traces his investing roots to distressed debt.

U.S. regulators recently told him may have violated federal securities laws by engaging in market manipulation involving unnamed bonds. Falcone also sparked government scrutiny and investor anger when he borrowed $113 million from his funds to pay his own taxes without telling his investors, who were prohibited from pulling their money out.

(Additional reporting by Katya Wachtel in New York; Editing by Matthew Goldstein and John Wallace)

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