Five years ago, Nortel was the pride of the bankruptcy bar because its IP auction surpassed expectations many times over. Unfortunately, that success led to litigation fees that surpassed expectations many times over. Barring settlement, Nortel will soon eclipse Lehman Brothers as history’s costliest bankruptcy, with over $2 billion in professional fees siphoned off of assets that are a fraction of Lehman’s.
Judge Frank Newbould of Ontario lamented that “Nortel’s early success in maximizing the value of its global assets through cooperation has disintegrated into value-eroding … territorial litigation.” Canadian pensioners in wolf suits protested outside a mediation session in New York last fall, wearing sandwich boards that read: “Lawyers: Stop wolfing down Nortel pensions. Settle now!”
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