NORTEL BANKRUPTCY: Courts Order Modified Pro Rata Allocation of $7.3 Billion Substantially Consistent with Thomas Britven’s Expert Testimony
At its height, a Canadian based telecom giant enjoyed a market cap of more than $280 billion and once accounted for more than a third of the total of all companies listed on the Toronto Stock Exchange. In January 2009, Nortel filed for protection from its creditors in multiple countries in an attempt to restructure its financial obligations. Nortel liquidated its assets, which included its vast patent portfolio to which its various operating businesses were licensees. The proceeds from these sales and the terms of the related intellectual property license agreements between the various legal entities/bankruptcy estates became the centerpiece of a $7.3 billion dollar dispute. Considered one of the largest bankruptcy cases in Canadian history, the Nortel allocation trial dealt with a flurry of cross border legal issues with joint hearings and simultaneous trials held in Ontario and Delaware courts.
The Canadian Creditors Committee selected Intellectual Property and Bankruptcy expert, Thomas Britven, to provide opinions and expert witness testimony in this multi-billion dollar dispute. Mr. Britven led a team of over 50 professionals to analyze Nortel’s historical and projected global footprint and address related issues of IP ownership, IP license rights and the value of those rights. Among other things, Mr. Britven testified that a pro rata allocation of Nortel’s liquidation proceeds was appropriate. Mr. Britven also presented a model, intended to aid the Court, with estimates of recoveries to various creditor classes based on the different allocation theories advanced by each of the parties.
The Canadian and U.S. Bankruptcy judges released their decision on May 12, 2015, with the Canadian court accepting Mr. Britven’s testimony as “an expert valuer” and ordering a modified pro rata allocation similar to what was proposed by Mr. Britven. This allocation was accepted by the Canadian Court as “doing what is just in the unique circumstances” of Nortel’s case, and by the U.S. court as “a fair and equitable mechanism,” that “yields the most acceptable result.”
Thomas Britven was retained in this case by Nortel’s CCC claimants, represented by law firms McCarthy Tetrault LLP, Paliare Roland, Shibley Righton LLP, Koskie Minsky, and DLA Piper. Some key members of Mr. Britven’s team included Managing Director, Douglas Ellis; Director, Brandon Lloyd; and Vice President, Lauren O’Shea.
MAY 3, 2016 UPDATE ON COURT OF APPEAL FOR ONTARIO DECISION:
On May 3, 2016, the Court of Appeal for Ontario released its decision denying leave to appeal from Justice Newbould’s allocation of the proceeds of sale of the remains of the Nortel Networks group of companies.