Nortel Retirees support appeal from US Bankruptcy Ruling

TORONTO, Jan. 2, 2015 /PRNewswire/ - Don Sproule, President of the NRPC, announced today that the organization fully supports the appeal filed today in the US by the Monitor for Nortel's Canadian Debtors from the US Bankruptcy Court's December 18th order. The December 18, 2014 order of Judge Kevin Gross of the US Bankruptcy Court for the District of Delaware sanctioned an agreement by Nortel's US Debtors to pay holders of Nortel Canada bonds guaranteed by Nortel US Debtors up to an additional US$1.1Billion in post-filing interest on their claims in the event such US Debtors' Chapter 11 estates prove to be solvent.

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On Dec 31^st, 2014, the Canadian Monitor filed a Notice of Appeal from  that decision.

Don Sproule, President of the NRPC stated:

"The NRPC is disappointed in, and frankly confused by, the US Court judgement and fully supports the Monitor's application to appeal".

He went on to say that

"We do not believe the ruling advances settlement as it proposes a totally unrealistic amount of interest and is an agreement between friendly parties in the US that excludes all other major players and therefore cannot constitute a 'compromise'."

Put forward by the US Debtors as a "settlement," the US Court sanctioned the agreement over the vociferous objection of the Monitor for Nortel's Canadian Debtor Nortel Networks Limited, which holds 100% of the equity in Nortel US parent Nortel Networks Inc.  The Monitor's objection was joined in by the Canadian Creditors Committee and Wilmington Trust as Indenture Trustee for bonds issued by the Nortel Canadian Debtors not guaranteed by the US Debtors. 

The US Court judgment is also in stark contrast to the determination last August by Justice Frank Newbould of the Ontario Superior Court of Justice (Commercial list) that the same bondholders have no right to receive any post-filing interest on their claims in the Nortel Canadian Debtors CCAA cases. On November 27, 2014, the Ontario Court of Appeal granted the bondholders' appeal from that decision on the issue of whether the "interest stops rule" was correctly applied. The NRPC's counsel together with other Canadian creditors will be making submissions for this hearing.

Further, the NRPC noted that the bondholders may receive in the US post-filing interest on their claims only if the Nortel US Debtors estate is solvent. Solvency of the US estate depends on the allocation of assets, which is a dispute that is still awaiting a decision from both the Canadian and US courts. The only allocation theory put forward likely to render the US estate solvent is the US's "revenue based" theory. The NRPC believes that the US "revenue based" theory is unlikely to prevail in both courts as it does not reflect the way Nortel ran as a global organization headquartered in Canada.

The NRPC continues to hope for prompt and effective decision or global settlement of the allocation dispute.

SOURCE Nortel Retirees and Former Employees Protection Canada

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