Nortel creditors will finally see something
• Nortel Canada’s bondholders, suppliers and former employees will finally start receiving their share of the roughly US$ 4 billion raised, more than eight years after the company filed for bankruptcy.
Nortel Networks Corp. — the one- time mammoth multinational telecommunications equipment maker — announced Friday the money owed to its stakeholders will be sent out starting late June or early July.
This will see the US$ 4.16 billion designated as Nortel Canada’s share of the $7.3-billion settlement, negotiated between it and its U. S. and European counterparts, carved up. The settlement will be divided and distributed in stages to those who filed claims against the Canadian section.
How much and exactly when the stakeholders will receive what they’re owed has not been announced. However, the company’s court- appointed monitor, Ernst and Young, has said creditors will receive less than US$ 0.50 per dollar owed. In some cases, that means as little as US$.0415.
Nortel Networks was one of the world’s leading telecommunications equipment makers. It peaked with 93,000 employees and a market capitalization of US$250 billion in the 1990s as the technology bubble expanded. It entered the millennium with a market cap so large, it accounted for about onethird the entire Toronto Stock Exchange.
However, from 1997 to 2001, a mad acquisition spree of Bay Networks and a host of untested startups cost the company billions. Following that — what was, in the court’s view — the unjustified acceptance of an independent investigation into its accounting, drove it to sack key members of its executive team, as the telecom industry crashed. It weathered the bust poorly, to say the least, and, in the early 2000s, carried out the largest downsizing in Canadian corporate history.
With scarce resources, things got worse. It couldn’t quite manage to develop fresh technology. The result? Cisco survived. Nortel did not.
In January 2009, the Mississauga, Ont.- based multinational filed for bankruptcy. It was the largest insolvency in Canadian history. When the former giant’s assets were sold off, it raised the $7.3 billion.
What followed was one of the largest bankruptcy cases in Canadian history. Legal and professional fees surrounding the company’s demise totalled around US$ 2 billion. When the deal was finally reached, eight years after the company filed for bankruptcy, the claimants’ return had fallen from 71 per cent to 44 per cent.
Those owed pensions were less than happy. However, Koskie Minsky lawyer Mark Zigler told the Post in October, shortly after the settlement was announced, the “pensioners did as well as they could’ve given what they were being offered.”