A bankruptcy court has denied Sprint Nextel Corp's motion for a partial summary judgment in a proceeding against bankrupt mobile satellite network operator TerreStar Networks Inc , U.S. Bancorp and others.

Sprint, in its motion, had filed a claim of $104 million against TerreStar, saying the amount was the network operator's share of the cost that Sprint incurred in acquiring bandwidth that TerreStar now uses.

Sprint also alleged that a lien on TerreStar's license assets held by the 15 percent senior unsecured noteholders be declared invalid or subordinate to Sprint's claims. U.S. Bancorp is the indenture trustee and collateral agent for the senior notes.

Judge Sean Lane, in his opinion stated that the it is the role of the bankruptcy judge and not any other body to determine the priority of Sprint's claim versus other parties' claims.

TerreStar holds the license for the S-Band spectrum, which was previously used for other purposes and was made available to TerreStar only after that it was cleared by Sprint.

TerreStar, which tried to market the first satellite smartphone, was coveted for its roughly 20 megahertz of spectrum. It filed for bankruptcy last October, with more than $1 billion in debt.

In July, a judge approved TerreStar Networks Inc's proposed $1.375 billion sale to Dish Network Corp , pushing the satellite communications company a step closer to emerging from bankruptcy.

Sprint, which is the third largest wireless company in the United States, has seen a fall in its subscribers and shrinking operating profit margins. Its second-quarter results were below Wall Street estimates.

The case is Re: Sprint Nextel Corp Et al vs. U.S. Bank National Association et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-05461.

The TerreStar bankruptcy case is in Re: TerreStar Networks Inc, U.S. Bankruptcy Court, Southern District of New York, No. 10-15446.

(Reporting by Tanya Agrawal in Bangalore; Editing by Saumyadeb Chakrabarty)

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