UPDATE 1-U.S., Canada judges mull fate of Nortel cash

Thu Mar 7, 2013 3:38pm EST
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By Tom Hals

WILMINGTON, Del, March 7 (Reuters) - Creditors of telecoms equipment giant Nortel Networks will find out on Friday how the bankrupt company will proceed in ending the years-long battle over its $9 billion in cash.

A Canadian and a U.S. judge will hold a joint conference call at 2 p.m. EST Friday to explain if they will handle the dispute over how to divide the money or whether it is a matter for international arbitration.

Their decision is also likely to determine when creditors -- ranging from tens of thousands of retirees to governments and hedge fund investors -- will get a sense of how much they will be repaid.

After Nortel sought protection from creditors in courts around the world in 2009, it sold off all of its operations and has piled up the cash in a New York escrow account.

The operations were sold as global entities. However, the various Nortel insolvency and bankruptcy proceedings in Canada, the United States and Europe never agreed how to divide the money.

Until each Nortel unit knows how much money it has, it is nearly impossible for those businesses to negotiate and settle the claims of their creditors.

The U.S. and Canadian businesses of Nortel want the matter decided jointly by U.S. Bankruptcy Court Judge Kevin Gross in Wilmington, Delaware, and Ontario Superior Court Justice Geoffrey Morawetz in Toronto. The two have been overseeing the North America cases since Nortel failed in 2009. They have already ordered three mediation sessions that failed.   Continued...