Published in News

Nortel fight goes to court

by on09 December 2013

There can be no settlement

A battle over the failed Nortel Networks' $7.5 billion in cash pile will be sorted out in a joint US/Canadian court and not in arbitration. The U.S. Court of Appeals for the Third Circuit in Philadelphia upheld a bankruptcy court ruling in March that there was never an agreement to use arbitration to divide the pile of cash among various Nortel estates around the world.

Nortel tried to get protection from creditors in courts around the world in 2009 and its businesses were quickly sold, reducing a once-global corporate giant to little more than a pile of cash. However, it was never decided how to allocate the money raised between different insolvency and bankruptcy proceedings in different countries.

Kevin Gross, a bankruptcy judge in Wilmington, and Ontario Superior Court Justice Geoffrey Morawetz in Toronto have scheduled a joint trial for next year to decide the dispute. The two have been holding joint hearings linked by video since Nortel sought creditor protection four years ago. An administrator for the European estates has said the unusual trial arrangement would lead to "chaos" in part because there is no appeals court that binds both courts.


Rate this item
(0 votes)