Judge Approves More Fees for Nortel Advisers

The professionals working on the long-running U.S. bankruptcy case of defunct telecommunications company Nortel  raked in another $36 million this week.

Tuesday, court papers show that a Delaware bankruptcy judge signed off on three months of bills from lawyers and advisers to Nortel U.S. The bills cover work performed from May through July.

Nortel filed for insolvency protection in multiple jurisdictions around the world at the start of 2009. It sold its businesses in a few years and then launched an intercompany fight over how to divvy up the cash raised in the global liquidation: a whopping $7.3 billion. 

Mediation after mediation failed, and there’s no decision yet from a trial that began in May. Two judges, one in Canada and one in the U.S., will rule on how to divide the money. In the meantime, the professional fee meters continue to tick. Bankruptcy Beat recently reported that Nortel U.S. spent $169 million on its bankruptcy case in the first nine months of this year.

Court papers show that Cleary Gottlieb Steen & Hamilton, the lead law firm for Nortel U.S. in bankruptcy, was the top earner in the crowd, taking in $21.5 million in fees and expenses from May through July. That brought Cleary’s total take from the Chapter 11 case to more than $291 million in authorized fees and expenses.

Professionals working for the official committee of Nortel U.S. creditors  have taken in more than $105 million during Nortel’s years in bankruptcy. Lead law firm Akin Gump Strauss Hauer & Feld has been paid more than $63 million of the total, according to court papers. 

Together, the 15 professional firms on Nortel U.S.’s tab during the most recent quarter—there have been many others, at other points in the proceedings—have made about $480 million from the company’s collapse and the fighting that followed.

Nortel Networks Corp., the Canadian parent company, is also paying for a fleet of lawyers in its Canadian insolvency proceeding, including lawyers for the bondholders who have allied with Nortel U.S. against Nortel Canada in the dispute over the liquidation proceeds as well as in a related dispute over a proposed $1 billion settlement on interest due on the bonds. Meanwhile, representatives of British pensioners are paying their own legal fees.

All in, estimates of the money coming out of Nortel’s bank accounts and going into the coffers of professionals in multiple jurisdictions top $1.3 billion, lawyers involved in the case have said.

Write to Peg Brickley at [email protected]