In the news
September 23, 2014
Nortel’s bankruptcy trial hears closing arguments
The Canadian Press
Lawyers for Nortel’s U.K. pensioners say all creditors owned the tech company’s patents and the money from their sale must be allocated on a pro-rata basis to the various bankrupt entities.
They say this approach, which lawyers for Canadian pensioners and former retirees have also said is an acceptable option, would be the most likely to stand up to almost inevitable appeals and hasten a conclusion to a process that began in January 2009.
The lawyers added that the money spent so far on Nortel’s court supervised windup, estimates range from $1 billion to $1.5 billion, has reduced what can be distributed to unsecured creditors, such as pensioners, former employees and trade suppliers.
“Our clients need finality. They need a distribution,” Thornton Grout lawyer D.J. Miller said Tuesday during the second day of closing arguments at the former tech company’s bankruptcy trial.
Competing groups of creditors have been focusing on the legal interpretation of a 10-year-old agreement to determine how to divvy up billions of dollars in proceeds from the sale of Nortel’s patents and intellectual property.
In total, the trial is expected to determine how $7.3 billion of remaining Nortel assets are allocated among the various legal entities that are undergoing court-supervised windups in several jurisdictions.
That total includes about $4.5 billion from the sale of patents and other intellectual property owned by the Nortel companies that sought creditor protection in January 2009.
A key question for the courts to decide is: which of the Nortel companies owned the patents and intellectual property.
The decision rests with two judges who are presiding over the closing arguments by video link in Toronto and Delaware.
Nortel pensioners and former employees have been watching the case since the trial began last May. Since the claims against Nortel are bigger than the money available to distribute, their hopes for recovering some of their retirement and health benefits hinge on how much money is allocated to the Canadian parent.
At its height, Nortel was the most valuable company on the Toronto Stock Exchange and employed more than 90,000 people around the world.
The company was hurt by changing market conditions and an accounting scandal that sent its stock price plunging.
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