Nortel trade claims group seeks reconsideration of settlement order

By Caroline Salls

Pittsburgh, Dec. 12 – Nortel Networks Inc.’s Nortel Trade Claims Consortium is asking the U.S. Bankruptcy Court for the District of Delaware to reconsider and vacate an order that provisionally allows crossover bondholders to file a $4 billion general unsecured claim in the Nortel cases in connection with a post-petition interest (PPI) settlement, according to a Friday filing.

Liquidity Solutions, Inc. joined the consortium’s motion on Friday.

The consortium said the basis for the settlement no longer exists in light of a PPI dispute that has since been deemed moot.

The consortium also objected to allowance of the crossover bond claims against Nortel’s U.S. debtors on the grounds that the court’s allocation opinion constitutes a de facto substantive consolidation of multiple debtor estates.

In addition, Liquidity Solutions said in its motion for reconsideration that the allocation opinion “appears to constitute a de facto reclassification or recharacterization of the crossover bonds claims vis-à-vis other U.S. general unsecured claims, which warrants reexamining whether the crossover bonds claims should be treated [equally] with the non-bond claims.”

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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