Nortel Bankruptcy Judges Rule on Division of $7 Billion

Judges in the U.S. and Canada rejected proposals backed by warring creditors of Nortel Networks Corp. for dividing more than $7 billion in cash, causing bonds of the defunct telephone maker to plunge.

Instead of choosing from among the distribution schemes put forth by three competing Nortel groups on behalf of their creditors, the judges said the money will be distributed on a proportional basis once claims against the Canadian company have been resolved.