UPDATE 1-Judges craft their own formula for Nortel's $7.3 bln in cash
(New throughout, adds details and background)
By Tom Hals
WILMINGTON, Del May 12 (Reuters) - The Canadian and U.S. judges charged with dividing the $7.3 billion from the liquidation of Nortel Networks rejected proposals from former regional businesses and opted for a pro rata split of the money in long-awaited rulings on Tuesday.
Judges on the U.S. Bankruptcy Court in Wilmington, Delaware and Ontario Superior Court of Justice held an unprecedented joint cross-border trial on the dispute, with the courtrooms linked by video. The legal battle has raged for years through numerous courts, chewing up more than $1 billion in fees for lawyers and other advisors.
Nortel filed for bankruptcy in 2009 and sold its global operations and patents, raising the cash in dispute. In the years that corporate entities in Canada, the United States and Europe have fought over the funds, retirees and bond investors have awaited repayment.
U.S. Bankruptcy Judge Kevin Gross and Justice Frank Newbould said in separate opinions that each regional business would receive cash to pay its creditors based on their claims against it as a percentage of the overall claims worldwide.
The judges said in their simultaneous opinions that a pro rata division was the most fair and satisfactory way to split the money.
Gross wrote in his 130-page opinion that the various regional business "have lost sight of the irrationality of their respective positions" and left "no virtually no middle ground."
The Canadian unit had argued it should receive about 83 percent of the money, because it was the legal owner of many of the assets sold. The European businesses wanted the money divided based on each region's contribution toward creating the value of the assets that were sold. As the U.S. unit saw things, it deserved 73 percent of the cash based on its beneficial ownership model. Continued...