* Wilmington, Toronto courts to jointly host trial
* Trial will determine how to split $9 bln
* Experts: Joint cross-border trial seems unprecedented
* Some question if the joint trial is workable
By Tom Hals
March 8 A U.S. judge and a Canadian judge agreed
on Friday to a joint, simultaneous trial to decide how to divide
$9 billion from the liquidation of Nortel Networks, overruling
objections that the unusual arrangement would lead to "chaos."
Kevin Gross, a U.S. Bankruptcy Court judge in Wilmington,
Delaware, told the parties on a conference call held jointly
with a Canadian judge that the litigants should prepare for a
trial late this year.
Administrators for former Nortel units in Europe had
requested the judges send the matter to binding arbitration.
They can appeal the ruling. Their lawyer, Derek Adler of Hughes
Hubbard & Reed, did not immediately respond to a request for
Gross and Ontario Superior Court Justice Geoffrey Morawetz
in Toronto have been overseeing the liquidation of the former
telecoms giant, which once had a market value of $250 billion
and global operations that employed 93,000.
After Nortel filed in 2009 for protection from creditors in
courts around the world, its units in the United States, Canada
and Europe agreed to sell Nortel's operations as global
businesses as a way to increase their value.
However, those units in different countries never tackled
the complex question of how to split the money that was raised.
Until each Nortel unit knows how much money it has, it is
nearly impossible to negotiate and settle the more than $30
billions of claims of their creditors. Four years after Nortel's
collapse, tens of thousands of retirees, governments, suppliers
and hedge funds are still waiting to be paid.
The U.S. and Canadian units wanted a public trial after
three attempts to mediate the dispute failed. Their attorney
told a hearing in Wilmington on Thursday that he wanted court
scrutiny of the European units' claims to the $9 billion.
Adler, the lawyer for the European units, said a joint trial
would lead to chaos if the judges in the Canada and the United
States reached conflicting rulings with no appeals court to bind
As if to make his point, the telecast that joined the
Canadian and Delaware courtrooms on Thursday was marred by
technical glitches that rendered portions of the Toronto
proceedings inaudible in Wilmington. Adler questioned whether
the shaky link-up would make it impossible to cross-examine
witnesses, denying his clients due process.
Legal experts agreed there was little precedent for a
contested joint trial like the one being contemplated in Nortel,
which could run for weeks.
"I think there are logistical and practical issues that will
make this very difficult," said Tom Salerno, a bankruptcy
attorney with Squire Sanders & Dempsey in Phoenix. "I think it's
going to become a little bit of a free-for-all."
Others were more optimistic and said that while a joint
contested trial might unprecedented, it was more evolutionary
"It might be the first but it's not like you're seeing pigs
fly or seeing something totally whacko," said Robert Rasmussen,
a professor at University of Southern California Law School.
He said the trend for 15 years has been toward this type of
cooperation in courts and said he expected the courts would
develop the protocols to handle the cases.
Gross said on Friday he was confident the judges were up to
the task thanks in part to the close working relationship they
had established in four years on the case.