Nortel cross-border bankruptcy trial underway in Toronto, Delaware

The division of remaining assets belonging to Nortel is going to be controversial

Bankruptcy trials are often complex enough, but the one now underway involving Nortel Networks stands to be even more confusing.

Not only does it involve over $7.3 billion in assets, but it also involves two countries: the United States and Canada. One courtroom is being used in Toronto and another in Delaware. They are connected via encrypted, live-streaming video and audio.

Among those fighting for the assets are lawyers representing 20,000 ex-employees and many creditors.

The Nortel case is costing $1.185 billion, according to data cited by the media from Diane Urquhart, an adviser working with ex-Nortel employees.

As of now, the trial is expected to see some 16,000 documents compared to the original 3 million. Mark Zigler, of Koskie Minsky, who represents some ex-Nortel employees, told The Canadian Press, “There's just so many thousands of documents."

There have already been 110 depositions of witnesses. In addition, 56 people could be called as witnesses in the trial.

The judges in charge of the case are Kevin Gross in Delaware and Frank Newbould in Ontario.

Alan Mark, a lawyer for Goodmans, the Canadian monitor for Nortel's liquidation, remarked to The Canadian Press, "Procedurally it's certainly precedent setting having a trial proceed jointly."

One interesting angle to the case is that proceedings “will follow legal practices in each country for portions of the trial conducted in each jurisdiction, which means witnesses will be questioned and cross-examined under rules in effect in whichever country they appear,” according to The Wall Street Journal.

As of about 2000, Nortel was worth about $300 billion. The company sold off many patents in 2011 for $4.5 billion. Ericsson acquired Nortel’s wireless business for $1 billion.

The trial opens with much disagreement over how the current assets should be divided, according to a report from The Toronto Globe & Mail.

On Monday, there were far more attorneys present in the Toronto courtroom, about 50, than ex-employees.

In addition, lawyers representing Microsoft are trying to keep secret more than 6,000 patents the company acquired with Apple and Sony under the Rockstar Consortium, a joint venture involving the three companies, according to a report from Bloomberg News.

Judge Gross will “defer to Microsoft and the other companies on the secrecy of certain documents,” the Bloomberg report adds. “Anyone challenging the need for secrecy would have to show why a document should be made public.”

The trial is believed to be one of the largest bankruptcy cases ever in Canada, with Nortel once being the nation’s largest telecom maker.

 

Further reading:

 

Google lawsuit against Rockstar to stay in California

Nortel settles claim with long-term disability employees

Economic loss is focus of Bankruptcy Court proceeding related to GM recall

 
 
 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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