Nortel Networks Inc., the U.S. unit of bankrupt Canadian vendor Nortel Networks Corp., has agreed to pay U.S. creditors as much as $1 billion to cover interest that investors claim has built up since the company filed for bankruptcy in 2009. The vendor settled a dispute with its bondholders over how much interest they can collect on $3.93 billion in debt issued in 2006 and 2007, according to a court filing. The agreement was announced just ahead of a hearing on the issue by the judge overseeing the U.S. unit's bankruptcy. Settling the dispute "will streamline" other court fights, including a battle over how to share about $7 billion in cash among creditors in the U.S., Canada and Europe, according to the filing.
Nortel liquidated is assets after filing for bankruptcy. A coalition of six companies, including Apple (NASDAQ: AAPL), BlackBerry (NASDAQ:BBRY), Ericsson (NASDAQ: ERIC) and Microsoft (NASDAQ: MSFT), won Nortel's patent portfolio for $4.5 billion in a bankruptcy auction in 2011. Ericsson also bought most of Nortel's CDMA and LTE assets for $1.13 billion in 2009 and also won Nortel's North American GSM business.
Since then, Bloomberg notes, pensioners in the UK and Canada have battled in court with bondholders in the U.S. over how to split the $7 billion raised by the U.S. asset sales. Article