TORONTO – The next stage of the Nortel Networks Ltd. bankruptcy trial begins Monday as U.K. lawyers make arguments for a share of the US$7.3 billion earned in the sale of the former technology giant’s assets.
Representatives of U.K. pensioners, as well as lawyers for Nortel’s operations in Europe, the Middle East and Africa, will ask a Toronto judge to consider their claims on the money.
The arguments are expected to last for about two weeks before written submissions are filed later this month.
It’s a smaller portion of the much larger Canada-U.S., cross-border trial that began in May aimed at allocating billions of dollars to various creditors, including bondholders and 20,000 Canadian Nortel pensioners who have seen their benefits dramatically reduced since the company filed for bankruptcy in 2009.
Those hearings wrapped up last month with a decision reserved for later this year.
Later in July, judges on both sides of the border will hear arguments over how much interest should be paid on US$4.1 billion of outstanding bond debt and the calculation that should be used.
READ MORE: Nortel pensioners faced ‘significant losses’ says lawyer
Lawyers for Nortel’s U.S. operations and bondholders have argued against the hearing over the interest to be paid until after the judges decide how much money is being paid to each division. They say the allocation decision will determine if Nortel even has enough money to afford paying bond interest.
At its height from 1999 to 2000, Nortel was worth nearly $300 billion, employed more than 90,000 people globally and was regarded as one of Canada’s most valuable tech companies.
In 2009, Nortel filed for bankruptcy in North America and Europe. The company was felled by changing market conditions, economic upheaval and an accounting scandal that devastated its stock price.
Since its fall, Nortel has broken up and sold off various parts of its business, including patents and wireless technology, the proceeds of which are now at issue.
The Nortel trial is considered one of the biggest bankruptcy cases in Canadian history. The cost of Nortel’s demise has climbed above US$1 billion over the past five years, with legal expenses eating away at money that could be divided among the various parties.
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