US, Canadian courts throw out Nortel appeal over ‘misleading’ figures
Two courts have thrown out an appeal by Nortel Networks bond holders against a decision to provide the UK pension fund with equal claim on assets, after the US creditors were accused of misleading the case.
In May, two judges sitting simultaneously in US and Canadian courts ruled that the trustees of the Nortel Networks UK pension scheme were entitled to an equal share of the remaining $7bn (€6.3bn) of assets left over from one of the world’s largest insolvencies.
Nortel’s other creditors, mainly US bond holders, challenged the decision, which they said was unequal between their claim and that of UK trustees, backed by The Pensions Regulator (TPR) and Pension Protection Fund (PPF).
Again, judges in the US and Canada dismissed bond holders’ claims that the initial decision would lead to unintended consequences.
Judge Gross from the Delaware Bankruptcy Court said he fully understood the implications of the decision made in May, while Justice Newbould from the Supreme Court of Ontario accused the bond holders of providing misleading figures.
“I see no injustice in the result,” Newbould said.
“I need not repeat what is contained in the reasons for judgment released on 12 May 2015. Nothing argued on this motion leads me to consider I erred in any way in those reasons.”
The original case has been ongoing since the Canadian company’s insolvency in 2009, triggering one of the world’s largest insolvencies.
Facing a £2.1bn (€2.9bn) hole in the UK pension scheme, the trustees, alongside the regulator and PPF, began legal proceedings against the remaining estate to seek funding.
However, proceedings were then challenged by the company over the right of the UK regulator to issue demands across borders.
Other creditors also challenged the ruling, suggesting they had more right to the remaining $7.3bn of Nortel assets, with May’s decision providing equal footing.
Angela Dimsdale Gill, a partner at law firm Hogan Lovells, which represented the trustees, said the firm saw no basis to change the judgments in the appeal.
“The Judges have demonstrated they are robust in their view that a pro rata distribution of the remaining Nortel assets is the fairest and most just result,” she said.
“We hope the matter can now be swiftly concluded and that all creditors can access what is rightfully theirs.”