Nortel plan effective May 8; initial distributions expected by July 7

By Caroline Salls

Pittsburgh, May 9 – Nortel Networks Inc.’s amended plan of reorganization took effect on Monday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Jan. 24.

According to the notice, Nortel expects to make initial distributions to holders of allowed claims on or before July 7.

As previously reported, the key components of the amended plan include:

• Payment in full of all allowed administrative expense claims, priority tax claims, priority non-tax claims and secured claims against each debtor;

• Payment of creditor proceeds to holders of general unsecured claims and specified bond claims;

• Payment in cash of 55% of the total amount of convenience claims;

• A previously announced global resolution among the Nortel Group regarding the allocation of sale proceeds among the Nortel estates and settlement of other inter-estate claims and other claims;

• Approval of a process whereby the sale proceeds currently in escrow accounts will be released simultaneously to each Nortel Group estate;

• The appointment of a plan administrator to wind down and distribute the assets of each debtor estate; and

• No expected distribution for interest holders or holders of security interest fraud 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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