UPDATE 3-Nortel settles fight to divvy up $7.3 bln from liquidation

Wed Oct 12, 2016 9:00pm EDT
 
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(Adds comparison with previous ruling)

By Tracy Rucinski and Jim Christie

Oct 12 (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, Microsoft Corp and Sony Corp.

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.   Continued...