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Nortel settlement may be in sight as Canadian judge denies U.S. bondholders $1.6-billion in post-claim interest

Justice Frank Newbould of the Ontario Superior Court of Justice today ruled that U.S. bondholders who are claimants on the remaining assets of now-defunct Nortel are not entitled to $1.6-billion in interest that accrued after they filed their claim in the bankruptcy

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Justice Frank Newbould of the Ontario Superior Court of Justice today ruled that U.S. bondholders who are claimants on the remaining assets of now-defunct Nortel are not entitled to $1.6-billion in interest that accrued after they filed their claim in the bankruptcy.

The Monitor had previously advised the courts that the post-claim interest was the “elephant in the room” so far as settlement of the proceedings was concerned. U.S. debtors and bondholders claimed to have “settled” the post-claim interest issue in the U.S., but the courts have not yet approved that “settlement.” The Monitor is questioning whether that settlement was reached at arm’s length.

Regardless of the outcome in the U.S., Newbould’s decision may well have brought an overall settlement of the litigation a step closer to reality.

“Subject to an appeal, the fact that there’s now an extra $1.6-billion in the pool considerably enhances the chances of a settlement,” said a lawyer close to the case.

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More to come.…

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