03/11/13
On Friday, Kevin Gross a U.S. Bankruptcy Court judge in Wilmington, Delaware, informed the administrators for former Nortel units in Europe that he would be handling the matter jointly with a Canadian judge and a trial would be held later this year. The matter concerns the division and distribution of the $9 billion liquidation proceeds of Nortel Networks, though there have been objections that bankruptcy courts from two countries working in tandem may lead to disorder.
The concerned administrators of Nortel had requested the judges to send the matter for arbitration. There is a possibility that they would appeal the ruling by the bankruptcy court.
Until now, Gross and Ontario Superior Court Justice Geoffrey Morawetz in Toronto had been presiding over the liquidation of Nortel, which once employed about 93,000 employees and had a market value of $250 billion.
When Norton went under bankruptcy in 2009, its global units agreed with each other to sell Nortel’s assets or operations without any plan or agreement upon how to concretely divide the proceeds amongst themselves.
This has led to a situation where, even after four years of the collapse and liquidation of Nortel, thousands of retirees, and other creditors are waiting to be paid, while about $9 billion proceeds is lying in safes.
With mediation talks between themselves having failed thrice, the U.S. and Canadian units of Nortel requested a public trial, while the European unit wanted binding arbitration.
The European units believe that if judges in Canada and US reach conflicting rulings then it may lead to chaos since there is no binding precedent and the matters cannot be taken to any appeals court with jurisdiction of both the courts in question.
So, they think, binding arbitration is a better solution for the matter.
