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Nortel amended plan, settlement not supported by trade claims group
By Caroline Salls
Pittsburgh, Nov. 29 – Nortel Networks, Inc.’s first amended Chapter 11 plan is not supported by the Nortel Trade Claims Consortium, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.
In addition, the consortium does not support the settlement and plans support agreement (SPSA), which sets the allocation of sale proceeds between the Nortel affiliates and resolves other claims among the affiliates.
If the amended plan is not confirmed for any individual debtor, the plan will be treated at the confirmation hearing as a motion seeking approval of the SPSA for that debtor, the filing said.
If an individual debtor’s entry into the SPSA is approved, that debtor may dismiss or convert its Chapter 11 case to comply with the settlement or to wind down.
Nortel said in its amended disclosure statement that it believes that the SPSA settlement is beneficial to the debtors and their creditors.
In addition, the company said the “plan is in the best interests of the debtors’ creditors” because it precludes continued litigation, increasing the likelihood that the amounts available for recovery by creditors would be reduced.
Without the SPSA, Nortel said it would also continue to incur significant administrative and professional costs during the pendency of the cases, which would reduce the amount available for recovery, and further litigation and disputes would result in additional delays in the debtors’ ability to make distributions to their creditors.
A hearing on approval of the disclosure statement is scheduled for Thursday.
Nortel, a Brampton, Ont.-based manufacturer and supplier of telecommunications networking equipment, filed for bankruptcy on Jan. 14, 2009. Its Chapter 11 case number is 09-10138.
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