Nortel settles fight to divvy up $7.3 billion from liquidation
By Tracy Rucinski and Jim Christie
(Reuters) - Former telecommunications equipment company Nortel Networks Ltd reached an agreement with their various business units on Wednesday to divvy up the $7.3 billion raised from liquidating the failed company, paving the way for pensioners and creditors to get paid after a seven-year wait.
Ontario-based Nortel stumbled from ranking among the world's most valuable companies during the 1990s Internet bubble to bankruptcy in 2009 and liquidation.
The cash at the center of the dispute was raised from the sale of Nortel's global businesses, including patents sold in 2011 for $4.5 billion to a group of technology firms led by Apple Inc (AAPL.O: Quote), Microsoft Corp and Sony Corp (6758.T: Quote).
Under the agreement, Nortel's former U.S. business unit would receive 24 percent or $1.8 billion of the cash, with Nortel estates in Canada and Europe receiving 57 percent and 18 percent respectively, the former company said in a court filing.
The U.S. estate's portion is higher versus the 11 percent the group was set to receive under a previous court ruling that would have allocated 66 percent of the proceeds to the Canadian estate and 23 percent to the European estate.
The settlement still needs approval from U.S., Canadian, U.K. and French courts. If approved, this would clear the way for each business division to pay suppliers, pensioners, government agencies and other creditors.
The deal could end one of the costliest corporate failures. Fees alone for lawyers and advisers paid out of the Nortel estate have topped $1.9 billion, according to Diane Urquhart, a financial analyst who compiles the data from court records.
Former Nortel business units in Canada, the United States and Europe had been pushing vastly differing proposals for splitting the money from the liquidation. That led to a six-week trial in 2014 that was jointly overseen by a judge in Ontario and a U.S. Bankruptcy judge in Delaware, who linked their courtrooms by cross-border video. Continued...