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By filing Chapter 11 bankruptcy last week, NextWave Telecom Inc. turned up its nose at the FCC’s alternatives for resolving $4.3 billion in debt.

NextWave–which has operations in Washington, D.C., and San Diegochose to file bankruptcy in the Federal Bankruptcy Court for the Southern District of New York.

In bankruptcy, the right judge can be everything. In federal bankruptcy courts, judges are randomly assigned. NextWave’s case will be heard by Judge Adli Hardin. While Hardin’s views on the issue are unknown, NextWave missed having its case heard by one of Hardin’s colleagues in that district–a jurist viewed as the most pro-debtor of any nationally, said Lynne Lopucki, visiting law professor at Harvard Law School. “Other judges there are not considered pro-debtor,” or anti-debtor, he added.

Earlier this year, a Texas bankruptcy judge gave another winner of the FCC’s C-Block personal communications services auction, General Wireless Inc., a 90 percent reduction in the $1 billion owed the FCC. The Department of Justice last week appealed the decision.

Also crucial is the creditors’ role. But the FCC, each licensee’s chief creditor, has “failed to protect [its] security interest” by not establishing its “first call” on the C-Block licenses, said Harvard Law School Professor Elizabeth Warren.

The FCC, however, may have an ace up its sleeve. The full commission hasn’t yet decided whether to overturn the Wireless Telecommunications Bureau’s 1997 ruling that rejected petitions to deny NextWave’s licensing. Were the FCC to do so, a local lawyer said, it could treat NextWave’s licenses as if they were never granted, avoiding the court entirely.

In a statement, NextWave, which claims to have spent $80 million on network construction, said the FCC’s debt restructuring options kept it from further financing of its buildout. NextWave Chairman and President Allen Salmasi said, “Unfortunately, our experience has been the same as other major C-Block licensees.”

On the day NextWave went bankrupt, other C-Block auction winners, including Pocket Communications Inc., were choosing one of the FCC’s debt restructuring options. Pocket’s “provisional” pick involves returning most of its 43 licenses but keeping several in the Midwest and those for New Orleans and Las Vegas. Pocket Chairman and CEO Dan Riker said it’s less viable than the plan of chief creditors to buy the Dallas and Chicago licenses or one of counteroffers made directly to the FCC. Riker expects Pocket will emerge from bankruptcy this fall.

Last week, National Telecom PCS Inc. offered $300 million for Pocket, with $235 million to go to the FCC to pay for the licenses in full and $40 million to go to NatTel to settle a $1 billion lawsuit. NatTel President Jack Robinson said this is a better deal for the FCC since the Pocket creditors’ plan involves a 10-year loan. He doesn’t yet have the money, but the licenses would come cheaply enough to gain financing, said Robinson, a bankruptcy lawyer whose company defaulted on its own C-Block license.

The FCC won’t say how many C-Block auction winners chose which of its options but would say it knew of none besides NextWave electing bankruptcy. However, Personal Communications Network, a unit of Electronics Communications Corp., said it cut its $23.8 million FCC debt to $11.9 million via disaggregation of its six licenses.

Meanwhile, Riker empathized with NextWave’s decision, saying, “They’re in an impossible position under the FCC rules.”

In a letter to FCC Chairman Bill Kennard, Rep. John Dingell, D-Mich., the top Democrat on the House Commerce Committee, said the commission failed “to complete the C-Block licensing process until a year after the auction ended,” by which time “the market for spectrum financing declined precipitously,” making “it nearly impossible for C-Block businesses to finance their grossly devalued licenses.”

Kennard, however, reacted to NextWave’s bankruptcy with his own message to Congress, asking it to make clear the licenses “are public assets, not private property” subject to a bankruptcy court’s discretion.

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