TORONTO – The Canadian monitor for insolvent Nortel Networks is appealing last month’s US$1.01-billion court-approved interest settlement that puts most of the company’s remaining money into the hands creditors.
The appeal document was filed Wednesday with a U.S. Bankruptcy Court in Delaware by the court-appointed monitor for Nortel Networks Corp., the international firm’s Canadian parent company.
Reasons for the appeal were not outlined in the filings, but the Canadian monitor has complained that it had been excluded from the settlement discussions.
Last month, U.S. judge Kevin Gross approved the settlement deal reached in July as a resolution to a dispute over whether bondholders holding some $4 billion of debt were entitled to post-bankruptcy interest.
The amount agreed to in the settlement was less than the US$1.6 billion that would have been owed under the bondholders’ contract rate, but well above the US$90 million suggested by the Canadian monitor.
In his decision, Gross said it was a compromise that might be the “only way to efficiently bring these cases to their end.”
Don Sproule, a spokesman for a group representing Canadian retirees and former employees at Nortel, said Friday that he fully supports the appeal.
“We do not believe the ruling advances settlement as it proposes a totally unrealistic amount of interest,” said Sproule, president of Nortel Retirees and former employees Protection Canada.
“(It) is an agreement between friendly parties in the U.S. that excludes all other major players and therefore cannot constitute a compromise.”
Courts in the U.S., Europe and Canada still have yet to decide how $7.3 billion in remaining Nortel cash will be allocated among the Canadian, U.S. and European units. The money was raised primarily through the sale of patents and its former operations.
Nortel’s Canadian monitor has argued that it had the legal title to patents and ownership of the subsidiaries, and has argued the U.S. court decision puts a lower priority on former Nortel retirees and pension plan members in Canada.