In re Nortel Networks, Inc.

531 B.R. 53, 2015 Bankr. LEXIS 1713, 61 Bankr. Ct. Dec. (CRR) 29, 2015 WL 2448328
United States Bankruptcy Court, D. Delaware·Decided May 21, 2015·No. Case No. 09-10138(KG) (Jointly Administered)·Published·Cited by 8 cases

Opinion

MEMORANDUM OPINION

KEVI ROSS, U.S.B.J.

The Court is ruling on the motion of the “Ad Hoc Committee of Canadian Employees Terminated Pre-Petition” (the “Canadian Employees”) seeking leave to file proofs of claim after the expiration of the [57]*57Bar Date (defined below)1. For the reasons set forth below, the Court will deny the Motion.

JURISDICTION

The Court has jurisdiction over this matter and the judicial authority to issue a final order pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b).

BACKGROUND

Except as otherwise noted, the relevant facts are not the subject of genuine dispute. It is the emphasis on and interpretation of the facts and the application of the law that are disputed. On January 14, 2009 (the “Petition Date”), Nortel Networks, Inc. and certain of its U.S.-based affiliates (collectively, the “U.S. Debtors”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code2 (the “U.S. Proceedings”). Also on the Petition Date, certain of the U.S. Debtors’ Canada-based affiliates (the “Canadian Debtors”) initiated insolvency proceedings (the “Canadian Proceedings”) in the Ontario Superior Court of Justice (the “Canadian Court”) under Canada’s Companies’ Creditors Arrangement Act (the “CCAA”). As is required under the CCAA, at the outset of the Canadian Proceedings the Canadian Court appointed a monitor, Ernst & Young Inc. (the “Monitor”).3 The Canadian Court also appointed Canadian law firm Koskie Minsky, LLP (“Koskie Minsky”) to represent the interests of approximately 20,000 former employees of the Canadian Debtors, including the Canadian Employees. Finally, on the Petition Date, certain of the U.S. Debtors’ affiliates based in Europe, the Middle East, and Africa (the “EMEA Debtors,” together with the U.S. Debtors and the Canadian Debtors, the “Nortel Debtors”) initiated insolvency proceedings in the United Kingdom.

Prior to the Petition Date, the U.S. Debtors, along with the Canadian and EMEA Debtors, operated as an integrated, global networking solutions and telecommunications enterprise (“Nortel”). Nortel was headquartered in Canada but also had significant operations in the U.S., Europe, the Middle East, and Africa.

On August 4, 2009, the Court entered an order (the “Bar Date Order”) establishing September 30, 20Ó9 (the “Bar Date”), as the claims bar date in the U.S. Proceedings. [D.I. 1280]. The U.S. Debtors subsequently served notice of the Bar Date on all known creditors in compliance with the. Bar Date Order, ¶ 11. Further, the U.S. Debtors published notice of the Bar Date in The Globe and Mail and The Wall Street Journal (national and global editions) in compliance with the Bar Date Order, ¶ 15 (the “Published Notice”). The Published Notice was substantially in the form attached as Exhibit C to the Bar Date Order and, as is relevant here, contained the following language:

Pursuant to the Bar Date Order, all persons and entities ... who have a claim or a potential claim against the [U.S.] Debtors that arose prior to January 14, 2009, no matter who remote or contingent such right to payment or eq[58]*58uitable remedy may be, MUST FILE A PROOF OF CLAIM so as to be actually received ... on or before September 30, 2009....
NOTE: These procedures for filing claims apply only to claims against the Debtors in these chapter 11 cases. Several of the [U.S.] Debtors affiliates are subject to creditor protection proceedings in other jurisdictions, including Canada. Separate proceedings and deadlines have been or will be established in these other jurisdictions' for the filing of claims.... If you believe you have claims against [the Canadian Debtors], any such claims shall be filed in, and only in, the Canadian proceedings with the court appointed Monitor.
* ❖ *

[D.I. 1280-3]. The Bar Date Order further provided that the Published Notice “is hereby approved and shall be deemed good, adequate and sufficient publication notice of the [Bar Date].”4

On August 14, 2009, the Canadian Court entered an order pursuant to Section 18.6 of the CCAA recognizing the Bar Date Order (the “Recognition Order”). Various parties related to the Canadian Proceedings, including Koskie Minsky, received notice of the Recognition Order. Further, the Bar Date was well publicized in connection with the Canadian Proceedings, including in publicly filed documents, on the Monitor’s website, in weekly news bulletins issued to former employees of the Canadian Debtors by Koskie Minsky, and through a Linkedln group set up by former employees of the Canadian Debtors for purposes of information dissemination.

Soon after the Petition Date, the Nortel Debtors proceeded with an orderly, and coordinated liquidation of Nortel assets. Of particular note, from 2009 to 2011, the Nortel Debtors executed a series of sales which both the Court and the Canadian Court approved in joint hearings. The sales have come to be known as the “Line of Business” and “Patent Portfolio” sales. The Line of Business and Patent Portfolio sales ultimately generated approximately $7.3 billion in net proceeds (the “Sale Proceeds”).

In the years after the Nortel Debtors consummated the Line of Business and Patent Portfolio sales, representatives for the U.S., Canadian, and EMEA insolvency estates were unable to agree on how to allocate the Sale Proceeds between each estate (the “Allocation Dispute”). Over several years, the parties to the Allocation Dispute engaged in protracted settlement discussions, including three failed media-tions, the most recent of which ended in late January 2013. The Court, jointly with the Canadian Court, conducted a multi-week trial regarding the Allocation Dispute in May and June of 2014 and took the matter under advisement. On May 13, 2015, the Canadian Court and the Court issued their rulings on the Allocation Dispute, both adopting a pro rata methodology. Consequently, the plan confirmation process in the U.S. Proceedings has yet to begin in earnest.

The Canadian Employees are a self-styled “Ad Hoc Committee” of approxi[59]*59mately 1705 former employees of the Canadian Debtors. Prior to the Petition Date, each of the Canadian Debtors terminated the employment of the Canadian Employees who received a termination letter (the “Termination Letters”) which, as is relevant here, proposed a severance payment in return for releases benefitting the Nortel Entities (the “Releases”). “HR Shared Services,” a Nortel entity based in North Carolina which handled certain human resources functions for all Nortel Entities prepared the Termination Letters. In order to receive the proposed severance payment, the terminated employee was required to counter-sign the Termination Letter, thus agreeing to the Releases, and return it to HR Shared Services. The Termination Letters provided, in part, that:

As used in this letter, the term “Corporation” shall mean Nortel Networks Corporation,6

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In re Nortel Networks, Inc., 531 B.R. 53, 2015 Bankr. LEXIS 1713, 61 Bankr. Ct. Dec. (CRR) 29, 2015 WL 2448328 (Del. 2015).

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