Nortel Networks has agreed to pay $75 million to the defunct telecommunication company’s former European units to resolve claims it owes their pensioners and other creditors more than $3 billion.
It’s the latest in a series of settlements Nortel has struck with former workers as it seeks to disperse proceeds from its asset liquidation.
Nortel once employed several thousand people at its campus in Research Triangle Park.
Nortel and the European units must still resolve how to split up $7.5 billion the company raised by liquidating its assets after filing bankruptcy in 2009.
Ending the European claims, including a demand by a U.K. pension administrator for $2.5 billion, allows the company to move forward with distributing the cash it has raised to pay creditors, Nortel said in a filing today in U.S. Bankruptcy Court in Wilmington, Delaware.
“The settlement agreement represents a critical step forward by the parties to resolve the costly and contentious litigation amongst the Nortel affiliates,” the company said.
Nortel, based in Mississauga, Ontario, filed for bankruptcy in 2009 in Canada, the U.S., the U.K. and France, with various units under the control of separate teams of lawyers and under the jurisdictions of different courts.
How assets will be allocated among the various Nortel companies and their creditors will be decided by courts, not in arbitration, according to a Dec. 6 ruling from the U.S. Court of Appeals in Philadelphia.
[Nortel once employed several thousand people at its campus in Research Triangle Park.]
The Nortel companies filed for bankruptcy reorganization in January 2009 in the U.S., Canada and London. They reported $11.6 billion in consolidated assets against debt totaling $11.8 billion as of Sept. 30, 2008.
Mediation failed to resolve disputes about how sale proceeds should be distributed among Nortel companies around the world.
In July, some 200 disabled Nortel workers have scored a legal victory over Nortel, securing severance benefits.
The workers earlier had won a nearly $27 million settlement for other benefits.
In April, Nortel Networks Inc., the defunct telecommunications company, has won final court approval of a $66.9 million settlement over retiree benefits.
The agreement, negotiated with a committee representing retirees, applies to Nortel’s U.S. employees.
Under the settlement, retirees agreed to accept the money in exchange for the ending of benefits, according to reports from Dow Jones Daily Bankruptcy Review and Law360.
Nortel had sought to terminate the benefits last year.