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Nortel hearings begin in cross-border trial

By: David Friend, The Canadian Press

 | May 12, 2014 - 1:13 PM |
A man walks past a company sign at a Nortel Networks office tower in Toronto on Feb. 25, 2009. A complex trial to determine how billions of dollars in Nortel Networks Corp.'s remaining assets are to be divided begins Monday in a pricey cross-border hearing that's considered the first of its kind. THE CANADIAN PRESS/Nathan Denette

A man walks past a company sign at a Nortel Networks office tower in Toronto on Feb. 25, 2009. A complex trial to determine how billions of dollars in Nortel Networks Corp.'s remaining assets are to be divided begins Monday in a pricey cross-border hearing that's considered the first of its kind. THE CANADIAN PRESS/Nathan Denette

TORONTO - Nortel pensioners gathered in a Toronto courtroom on Monday to watch lawyers battle over billions of dollars in asset sales from the former technology giant — a fight that could have a major impact on their financial futures.

With their eyes locked on a giant projection screen, more than 20 pensioners sat in an overflow room watching the start of the seven-week cross-border trial unfold before them through a high-tech feed.

The showdown will unravel simultaneously via a secure multi-camera video link with a Delaware court, and determine how $7.3 billion from Nortel's assets are divided between former employees, pensioners, creditors and bondholders.

Judges in both Toronto and Wilmington, Del., will simultaneously conduct the proceedings.

On Monday, Nortel's former employees were easily outnumbered by a flurry of lawyers — at least 50 of legal staff were in Toronto and another bunch in a Delaware — fighting over the scraps of a company once hailed as Canada's technology darling.

"I'm here to show my support for the pensioners...because I'm able to come to Toronto," said Leonard Kozoil, a former Nortel employee who retired from the company a couple years before it crumbled in 2009.

Kozoil, 69, travelled from Ottawa to sit alongside former colleagues, some who he says were hit harder than he was. For a period of time he took a part-time job in retirement to make ends meet, he said.

The arguments began with lawyers representing Nortel's European operations, who told the judges that their division deserves a piece of the money generated by a $4.5 billion patent sale, even though they were legally owned by the parent company.

Lawyer Benjamin Zarnett said the assets were held under the main company "for administrative simplicity."

This isn't "some technical gotcha," he added.

The Nortel trial is considered one of the biggest bankruptcy cases in Canadian history.

Filings with the courts say about 16,000 documents will be presented as exhibits over the coming weeks — whittled down from an initial three million — and 110 witness depositions have been taken leading up to the trial.

The cost of the Nortel case has climbed to US$1.185 billion since early 2009, according to an estimate from Diane Urquhart, an independent adviser assisting former Nortel employees.

At its height in 1999 to 2000, Nortel was worth nearly $300 billion, employed more than 90,000 people globally and was regarded as one Canada's most valuable companies.

In 2009, the company filed for bankruptcy in North America and Europe, shedding thousands of jobs.

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