On July 6, 2015, Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) issued a Memorandum Order on Motions for Reconsideration (the “Reconsideration Order”) of the Bankruptcy Court’s May 12, 2015 opinion and order on allocation of proceeds totaling $7.3 billion among the Nortel companies (the “Allocation Decision”) with insolvency proceedings pending throughout the world and supervised by courts in the United States, Canada and the United Kingdom. In re: Nortel Networks, Inc. et al. case No. 09-10138(KG). The Allocation Decision had been issued following a 21 day joint trial before the Bankruptcy Court and the Canadian Court and consideration of a vast amount of evidence. The Bankruptcy Court and the Canadian Court arrived at the same decision which was challenged in the motions for reconsideration and/or clarification filed by the U.S. Debtors, the Unsecured Creditors Committee, the Bondholders and Law Debenture Trust Company as Indenture Trustee for the NNCC Notes.
In the Reconsideration Order, Judge Gross 1) denied the Bondholder’s request to reargue the Court’s determination that the Guaranteed Bonds will not be double counted; 2) granted the Bondholder’s request for clarification that the Allocation Decision did not intend to increase or decrease the Bondholder claims allowed in the settlement agreement between the Bondholders and the U.S. Debtors; 3) granted Law Debenture’s request to clarify that a reference to NNC was intended to reference NNCC; 4) denied the U.S. Debtors request to reconsider the conclusion that proceeds from the sale of NGS and DiamondWare were shared assets; 5) granted certain parties requests for clarification that “intercompany claims” are between individual debtors not debtor groups; 6) granted the U.S. Debtors request to clarify that the paid settlements are to be included in the allocation methodology; 7) denied as premature the U.S. Debtors request to clarify the process by which the Bankruptcy Court would measure the U.K. Pension Claim for allocation purposes; and 8) denied a request by the U.S. Debtors to clarify that allocation would include post-filing tax claims, indicating that the Allocation Decision does not address post-filing claims.
A copy of the Reconsideration Order is available here.