Nortel Networks resolves more than $3 billion in bankruptcy claims
By Tom Hals
(Reuters) - Nortel Networks Inc., a defunct telecoms company, has reached a deal that will cut more than $3 billion from what was allegedly owed to former Nortel entities in Europe, marking what it called a "significant milestone" to ending its five-year bankruptcy.
In return for withdrawing the claims, administrators of insolvent Nortel entities in Europe and a pension trustee in Britain would each receive high-priority administrative claims for $37.5 million, according to a court filing on Tuesday.
"The settlement agreement represents a critical step forward by the parties to resolve the costly and contentious litigation amongst the Nortel affiliates," said the filing, in the U.S. Bankruptcy Court in Wilmington, Delaware.
The parties also agreed to work together to try to resolve how to divide $7.5 billion in cash that was raised from liquidating the former Canadian telecommunications equipment maker, according to the documents.
The deal ends lengthy and long-running court fights over which Nortel entity owed what to whom, stemming from the complexity of unscrambling a company once worth $250 billion with 93,000 employees worldwide.
Thousands of bondholders, retirees and suppliers have been waiting to be repaid billions of dollars.
The legal battles have been fought in numerous jurisdictions applying a variety of laws, making a resolution in court a challenge. Several rounds of mediation also failed.
Tuesday's deal resolves a claim by a pension trustee that not enough money had been put aside for retirees in Britain. The trustee had been seeking more than $1 billion from two different bankrupt Nortel entities in North America. Continued...