U.K. Retirees of Nortel Networks Lose Their Bid for Arbitration of Bankruptcy Funds
U.K. retirees of Nortel Networks Corp. will not see the benefit of arbitration in their dispute against the telecommunications giant that has now declared bankruptcy and closed its operations across several continents. There is $7 billion up for distribution among European, U.S. and Canadian creditors and retirees of the Canadian-based Nortel Network, although $9 billion has already been distributed to the U.S. and Canadian creditors of the company. Regardless of how funds are dispersed, however, there simply isn’t enough to pay all that is owed by the defunct company.
The bankruptcy of Nortel spans the Canadian, French and U.S. courts, as the European units fight to see more of the cash left over from the dissolution of the company. However, according to the presiding judges—U.S. bankruptcy Judge Kevin Gross in Delaware and Ontario Superior Court Justice Geoffrey Morawetz in Toronto—the decision of how the money will be split is to be their decision rather than an arbitrator’s. “We will develop a practical solution. We will plan for trial in the fall,” said Judge Gross.
According to the officials overseeing the bankruptcy filing in the U.K, the other countries’ courts have been taking money that belonged to the European retirees and creditors for several years. Therefore, the U.K. bankruptcy administrators are requesting that $2.67 billion of the $7 million up for grabs be given to Nortel’s U.K. retirees.
The entire issue has been a squabble between groups from the beginning, as the U.K., U.S., Canadian and European retirees and creditors of the company have sought their fair portion of the company’s limited cash to close out the bankruptcy proceedings. There is no possible way for everyone connected to get what is owed to them; for example, Canadian creditors of Nortel have presented the bankruptcy court with more than $36 billion in claims on their own.