Nortel Networks Inc. (NRTLQ), the telecommunications company being liquidated in bankruptcy, may soon settle a fight with its Asian and Latin American units over their share of more than $7 billion Nortel made from asset sales, an attorney said.
The company may reach a settlement in the next few weeks with its so-called fourth estate, which includes units in China, Australia and Mexico, Nortel attorney James Bromley, with the law firm of Cleary Gottlieb Steen & Hamilton LLP, said today in federal court.
“We are very, very close to getting that resolved,” Bromley told U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware.
Nortel’s three main so-called bankruptcy estates are made up of defunct operating units in the U.S., Canada and Europe. Those groups have been battling for more than a year over the best way to split more than $7 billion collected by selling businesses and a cache of 6,000 patents.
The groups, including the smaller units that make up a fourth estate, are participating in mediation sessions being lead by a Canadian judge in Toronto. The groups are arguing about how much each should get to pay their creditors, including pensions and other retirement benefits owed former employees.
“We need to reach an agreement with all the parties to resolve our allocation, which would allow us to get out of the mediation,” attorney Thomas M. Vitale, who represents the fourth estate, said in an interview today.
Vitale declined to say whether his group was close to striking a deal with Nortel’s U.S. unit or how much fourth- estate creditors may be owed.
Bromley also declined to say how much the fourth estate may be owed. Both lawyers said the amount is smaller than the claims made by the Canadian and European groups.
A settlement with the fourth estate wouldn’t end the disputes among the other groups.
Since filing for bankruptcy in 2009, Nortel, based in Mississauga, Ontario, has sold all of its major businesses and is preparing a plan to divide the proceeds among creditors.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at email@example.com