The eight-year legal battle over how to allocate Nortel Networks Corp. assets has reached a tentative settlement. Former employees and pensioners are eager to see their payout.
Considered one of the largest bankruptcy cases in Canadian history, the legal and professional fees of Nortel’s demise have climbed to US$2 billion over the past five years, according to an audit by independent financial analyst Diane Urquhart.
Mark Zigler, a lawyer with Toronto-based Koskie Minsky LLP, which represents a group of nearly 20,000 Canadian claimants,said the agreement announced late Wednesday will see Canadian debtors receive about 57 per cent of the proceeds, which amounts to about US$4.1 billion. U.S. debtors will get 24 per cent, or about US$1.8 billion, with the remainder expected to be paid to debtors in Europe.
The deal will see Canadian claimants collect a return of about 44 per cent on their claims, he said, which is lower than the original 71 per cent return anticipated when a deal was struck last May in U.S. bankruptcy court in Delaware and Ontario Superior Court.
Zigler said it was a tough decision, but claimants in Canada and Europe had to make a “compromise” with U.S. creditors or a deal wouldn’t have even been struck.
“No one is a winner in insolvency,” he said. “I think the pensioners did as well as they could’ve given what they were being offered by the other parties. In that retrospect, they persevered. It took eight years, all power to them to have the patience to fight this out.”
The latest settlement still needs approval from bankruptcy courts in Canada, France, the United States and the United Kingdom. Let’s hope that it happens. If that occurs, then pensioners and other creditors can expect to receive some form of payment by early next year.
Nortel’s bankruptcy resulted in the sale of various business units to meet creditor demands. They sold their Optera optical transport group to Ciena, their DMS switching group to Genband, their Enterprise business to Avaya, their Passport data products to Hitachi, and their GSM business to Ericsson and Kapsch. About $7.3 billion was raised through the sale.
If you thought that this issue was settled years ago, so did I. A settlement had been reached nearly three years ago http://www.truepulse.com/news-nortel/ . But bond holders protested, and the proceedings dragged on. With legal fees having surpassed 2 billion dollars, it was in everyone’s best interest (except perhaps the lawyers) to find a solution. http://www.truepulse.com/nortel-legal-fees-top-2-billion/
Hopefully Nortel’s former employees and pensioners can get on with their lives.
For more details on the settlement, see http://www.canada.com/business/nortel+settles+battle+divvy+billion+from+bankruptcy+liquidation/12276575/story.html