In re Nortel Networks Inc., et al.

Summarized by Cassandra Porter , Cognizant Technology Solutions
12 years 2 months ago

Citation:

Joint Administrators for Nortel Networs, No. 13-2739

Tag(s):

Ruling:

The U.S. Court of Appeals for the Third Circuit in Philadelphia upheld bankruptcy court ruling that there was never an agreement to use arbitration to divide estate assets.

Procedural context:

Appeal from the United States Bankruptcy Court for the District of Delaware

Facts:

In early 2009, Nortel entities around the world declared bankruptcy and filed petitions in U.S., Canadian, English, and French courts to begin insolvency proceedings. See In re Nortel Networks, Inc., 669 F.3d 128, 130-31 (3d Cir. 2011) (summarizing history of the Nortel bankruptcy). The following day, the U.S. Bankruptcy Court for the District of Delaware and the Superior Court of Ontario, Canada, each approved a cross-border protocol for coordinating U.S. and Canadian proceedings. Nortel debtors from the United States, Canada, Europe, the Middle East, and Africa entered into an "Interim Funding Agreement" on June 9, 2009 which Interim Funding Agreement “provides for the parties’ cooperation in the global sales of Nortel’s business units and agreement that the proceeds of any sale will be held in escrow until the parties either reach a consensual allocation or obtain a binding procedure for the allocation pursuant to an agreed upon protocol.” Nortel, 669 F.3d at 131. The Bankruptcy Court and the Ontario Superior Court held a cross-border hearing on the Interim Funding Agreement on June 29, 2009. Both courts approved the agreement. After the courts approved the Interim Funding Agreement, Nortel debtors held nine auctions. The auctions raised approximately $7.5 billion in proceeds. As agreed, the debtors placed those proceeds into escrow. However a protocal could not be agreed upon by the parties.

Judge(s):

FUENTES, GREENBERG, and BARRY

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