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Nov. 22 — Defunct telecommunications company Nortel Networks Inc. won a victory in its fight with federal pension regulators when a bankruptcy judge rejected a briefing schedule proposed by the Pension Benefit Guaranty Corporation ( In re Nortel Networks Inc. , Bankr. D. Del., No. 1:09-bk-10138-KG, minute entry 11/22/16 ).
Nortel, which filed for bankruptcy in 2009, had clashed with the PBGC over how to value the company’s unfunded pension liabilities. The PBGC claimed in 2009 that Nortel owed $593 million in pension payments, but the agency upped that amount to $708 million in 2014, a move that Nortel said lacked factual support.
The judge’s Nov. 22 decision setting an evidentiary hearing for Jan. 9-11, 2017, is a win for Nortel, which argued that the PBGC should be forced to turn over documents relevant to its valuation process. This move could signal the judge’s ultimate willingness to settle on a liability figure closer to Nortel’s suggested amounts, which ranged from $180 million to $460 million—well short of either amount proposed by the PBGC.
In seeking to resolve the parties’ legal disputes without formal discovery, the PBGC argued that all six bankruptcy courts that have considered the PBGC’s valuations since 2003 have resolved the cases on legal grounds and without considering discovery. Nortel contested this assertion, arguing that the PBGC’s position boiled down to the “single myopic concept” that discovery would be “too expensive.”
The decision was issued by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware. Gross didn’t provide a written explanation for his decision.
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Text of the court entry is at http://www.bloomberglaw.com/public/document/Nortel_Networks_Inc_et_al_and_Ernst__Young_Inc_As_Monitor__foreig/4.
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