Dentons have announced a successful and groundbreaking result for our client, Wilmington Trust, National Association, with the recent decisions of the courts overseeing the worldwide proceedings involving the Nortel group of companies. After more than six years, Canadian and US courts resolved the long-running bankruptcy proceedings of the now obsolete Nortel and Dentons partners John Salmas and Ken Kraft (Insolvency and Restructuring) were on the winning side of the US $7.3 billion proceeds allocation dispute. The Dentons team also included Sara Van Allen, Robert Kennedy and Derek Pontin.

Acting for Wilmington Trust, trustee of Nortel’s Canada-only bonds, Ken and John successfully argued that, in the event that the Canadian and US Courts could not come to an allocation decision based on the theory of legal ownership of the Nortel assets, the presiding judges should determine the dispute utilizing a global pari passu approach. Justice Newbould of the Ontario Superior Court of Justice and Judge Gross of the US Bankruptcy Court for the District of Delaware rendered complimentary decisions in resolving the dispute that continued for almost four years through three rounds of failed mediation and the culmination of a historical first: a cross-border insolvency trial involving courts sitting simultaneously in Toronto and Wilmington. In alignment with the Dentons’ team’s case, the judges ruled that the collapsed Nortel’s remaining funds should be distributed proportionately among the companies’ creditors around the world.

Dentons’ winning position for Wilmington Trust was actively advocated for by only one other party during the 8-week cross-border trial and multi-party dispute. The case is also noteworthy in that it is the first known multi-jurisdictional insolvency decision in which the pari passu result was judicially imposed on objecting parties.