Sunday, November 23rd2.6°C
24124

Nortel's former European operations may be near a settlement in bankruptcy trial

TORONTO - A settlement over how to divide up a portion of the US$7.3 billion made from the sale of certain Nortel Networks assets may be nearing completion.

Two sources familiar with the negotiations said Monday that lawyers for the former technology giant's operations in Europe, the Middle East and Africa are likely to reach an agreement on their share of the money sometime this week.

If a settlement materializes, it will clear one of the biggest hurdles yet in the complex attempt to dole out Nortel's money after it folded five years ago.

However, a European settlement would only resolve a small part of the bigger trial to divide the assets between other parties, including bondholders and Canadian pensioners.

An unprecedented Canada-U.S., cross-border trial 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 proceedings wrapped up last month with a decision reserved for later this year, though smaller portions of the Nortel case remain on the schedule.

On Monday, lawyers for U.K. pensioners made their opening remarks for a part of the trial focused on amounts they believe Nortel owes their clients. Unlike the main trial, which was simulcast using closed-circuit feeds from Delaware, this part of the proceeding is unfolding only in Toronto.

Lawyer Michael Barrack told the court that U.K. pensioners had two written guarantees from the Canadian company which guaranteed about $900 million in funding obligations and about $150 million as part of an "insolvency guarantee." However, he claims the court-appointed bankruptcy monitor has decided not to acknowledge those guarantees.

Barrack characterized the U.K. operations as a secondary headquarters for the company, saying that it saddled a "disproportionate amount of the selling and general expenses" for the larger company's European assets, while Nortel's Canadian division kept money away from the U.K., choosing instead to funnel it to Canada.

The arguments over the European operations are expected to last for about two weeks before written submissions are filed later this month.

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.

Lawyers for Nortel's U.S. operations and bondholders have argued against the interest hearing 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.

Follow @dj_friend on Twitter.

The Canadian Press


Read more Business News

24073


Recent Trending




Today's Market
S&P TSX15111.13+35.95
S&P CDNX789.135.56
DJIA17810.0691.06
Nasdaq4712.97+11.102
S&P 5002063.50+10.75
CDN Dollar0.8901-0.0002
Gold1201.50+10.60
Oil76.72+0.87
Lumber331.50+4.50
Natural Gas4.236-0.253

 
Okanagan Companies
Pacific Safety0.155-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.30+0.03
Cantex0.04+0.005
Anavex Life Sciences0.178+0.008
Metalex Ventures0.03+0.005
Russel Metals31.62+0.82
Copper Mountain Mining2.24+0.06
Colorado Resources0.125-0.015
ReliaBrand Inc0.013-0.002
Sunrise Resources Ltd0.050.00
Mission Ready Services0.35+0.015

 
24130


22970

FEATURED Property
2079464660 Greene Rd
5 bedrooms 3 baths
$699,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


What I learned in China: Part 2

As per my previous article on my visit to China, we have much to learn about and from their people. It is potentially the largest market on earth with 1.3 billion people in one country but much will d...


Retirement: Health Issues

Our health is really our greatest asset and maintaining our health is of tremendous importance. You want to do what you can to ensure that health issues will not jeopardize the enjoyment of your retir...


Be quiet already!

No, you’re not crazy. There really are voices in your head. Voices that keep you from doing what you need to do during your customer care calls. It can be the voice of your teachers, your parent...

_



24156

24207


Member of BC Press Council


22842