Settlement reached in smaller part of big Nortel trial
TORONTO – A settlement has been reached with one of the international divisions of Nortel Networks over certain claims related to the former technology giant.
Lawyers representing Nortel’s defunct operations in Europe, the Middle East and Africa told a judge on Tuesday they’ve come to an agreement with the court-appointed monitor over their claims against the Canadian company.
The settlement, however, does not resolve the larger challenge that will determine how to divide US$7.3 billion made from the sale of certain parts of the company.
What it does is resolve one of the bigger claims against the former Nortel’s Canadian debtors by reaching an agreement that, once disclosed to the court, will confirm the total amount of the claim that will be eligible to be paid by Nortel Canada for the creditors of the former operations based in Europe, the Middle East and Africa.
Details on the terms haven’t been provided to the court, but law firm Lax O’Sullivan Scott Lisus LLP says it will have a signed agreement by Wednesday morning.
The settlement only resolves a small part of the bigger claims trial that is ongoing in a Toronto courtroom, and is unrelated to the allocation trial which will divide the US$7.3 billion of sale proceeds among Nortel entities in three main jurisdictions, Canada, the United States and Europe.
An unprecedented Canada-U.S., cross-border trial began in May aimed at allocating billions of dollars among various Nortel companies worldwide, so that they can pay the money to their creditors, including bondholders, 20,000 Canadian Nortel pensioners and approximately 40,000 UK Nortel pensioners.
Those proceedings wrapped up last month with a decision reserved for later this year. Other portions of the Nortel case remain outstanding, including a battle unfolding in a Toronto courtroom this week over claims that the Canadian company still owes U.K. pensioners money.
Opening arguments for that part of the case unfolded at a snail’s pace on Tuesday, causing some lawyers to raise concerns that certain witnesses may not be able to accommodate a revised schedule. The testimony is expected to run into next week.
Unlike the main trial, which was simulcast using closed-circuit feeds from Delaware in joint proceedings in Canada and the U.S., the trial involving the claim of the U.K. pensioners is unfolding only in Toronto, and involve only the former Canadian operations and a decision by a Canadian judge.
The Nortel trial is considered one of the biggest bankruptcy cases in Canadian history. The cost of Nortel’s demise has climbed well above US$1 billion over the past five years, with legal expenses eating away at money that would otherwise be available to be divided among the various parties.
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 all of its businesses, including patents and wireless technology, the proceeds of which are now awaiting a judge’s decision.
© 2014 The Canadian Press