Eight years ago, Nortel Networks Inc. and many affiliates filed multiple insolvency proceedings, across Europe, the US, and Canada. At the outset, the debtors expected creditor recoveries would be small.

But then Nortel auctioned off its intellectual property portfolio and business lines, raising US$7.3 billion and the parties negotiated how to divide the money among the different estates. But a consensual agreement wasn’t reached. A key aspect was the intervention of the UK pension schemes which claimed to be entitled to proceeds from Nortel entities which were not contractually liable.

  • In 2014, the courts in the US and Canada held a joint, video-linked trial to determine how to allocate the funds. The Joint Administrators for the EMEA entities and UK Pension Trustee Limited and the Board of the UK Pension Protection Fund participated.
  • US Bankruptcy Judge Kevin Gross in Delaware, and Ontario Superior Court Justice Frank Newbould issued separate decisions that reached similar results – that the proceeds should be divided among the estates based on a modified pro rata methodology.
  • Following appeals and cross-appeals, multiple mediations finally resulted in a global settlement in summer 2016.

Mr Justice Richard Snowden in the High Court in London approved the settlement in November 2016. In the US and Canada, there will be similar hearings and if approved distributions to creditors will finally be made in 2017.


“These have been complex, challenging cross-border cases, and it will be good if creditors can finally start receiving distributions next year,” said Daniel A. Lowenthal, a partner at Patterson Belknap Webb & Tyler LLP in New York, who represents Law Debenture Trust Company New York, an indenture trustee in the case.