| WILMINGTON, Del., July 24
WILMINGTON, Del., July 24 Nortel Networks Inc,
the U.S. unit of defunct Canadian telecom company Nortel
Networks Corp, has agreed to pay up to about $1
billion in interest that has accrued on the $3.9 billion it owes
to its U.S. bondholders, a court filing showed.
Thursday's settlement comes as Nortel's bankrupt units in
Canada and Europe are fighting with the U.S. unit over how to
divide $7.3 billion raised by liquidating the global
The settlement, if approved by U.S. Bankruptcy Court Judge
Kevin Gross in Wilmington, Delaware, could affect Nortel
retirees in Canada and the United Kingdom. They argued that the
bondholders should get $90 million in interest, or no interest
Any funds that are left over in Nortel's U.S. bankruptcy
after paying off the bondholders and other U.S. creditors could
be used to help to make up for pension shortfalls in Canada and
the United Kingdom.
Under the proposed settlement, bondholders would be entitled
to post-petition interest of $876 million, potentially
increasing to as much as $1.01 billion if Nortel has not repaid
them by June 30 next year.
Nortel said the settlement will help speed the resolution of
Nortel sought protection from creditors in courts around the
world in 2009 and its businesses as well as its patents and
patent applications were quickly sold, reducing a once global
company to little more than a pile of cash. But it was never
decided how to allocate the money raised between different
insolvency and bankruptcy proceedings in different countries.
Gross and a Canadian judge held a simultaneous five-week
trial, connected by video link, that ended in June over the
question of how to divide the $7.3 billion. The judges have not
ruled, and the U.S. estate may not be allocated enough money to
repay the bondholders' $3.9 billion principal, let alone
The monitor overseeing the Canadian bankruptcy did not join
the settlement over the interest payments. An attorney for the
monitor, Ken Coleman of Allen & Overy in New York, did not
immediately return an email request for comment.
The case is In re Nortel Networks Inc, U.S. Bankruptcy
Court, District of Delaware, No. 09-10138.
(Reporting by Tom Hals in Wilmington, Delaware; Additional
reporting by; Mridhula Raghavan in Bangalore; Editing by Jan