UPDATE 1-Nortel Networks resolves more than $3 bln in bankruptcy claims

Tue Dec 17, 2013 12:03pm EST
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* UK pension trustee, European administrator withdraw claims

* Deal eliminates three of the four largest claims on U.S. estate

* No agreement on how to divide $7.5 bln in cash

By Tom Hals

Dec 17 (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.   Continued...