Claims process

The Canadian Monitor Ernst and Young has filed the 53rd monitor's report on the status of the Nortel situation. The report may be seen at the E&Y website under public documents, Monitor Reports.

It is also listed on the Epiq Website dockets.

The reports deals with the claims resolution process including the cross border protocol. If agreed and approved this will take us a little closer to the weeding out of duplicate claims and disallowed claims and eventually to the final settlement. At this point in time the number and amount of claims is so large that it will require a lot of analysis and decision making by the people leading the resolution process and the courts. This will not happen quickly

Here is an excerpt from the report dealing with the cross border protocol:

Agreement now having been reached on key terms of both the Claims Resolution Order and the Cross-Border Claims Protocol, the Applicants are seeking approval of the Claims Resolution Order at a hearing before this Honourable Court and the Applicants and the U.S. Debtors will be seeking the approval of the Cross-Border Claims Protocol at a joint hearing of this Honourable Court and the U.S. Court, both of which are scheduled to be heard on September 16, 2010.

The form of the Claims Resolution Order and Cross-Border Claims Order being sought are complementary to each other as they provide a mechanism to efficiently govern the coordination and resolution of claims filed in both these CCAA proceedings and the Chapter 11 Proceedings.

Proposed Cross-Border Claims Protocol

The provisions of the Cross-Border Claims Protocol relate primarily to the cooperation and consultation between the Applicants, Monitor and U.S. Debtors with respect to information relating to Overlapping Claims and Same-Creditor Claims (each as defined herein and collectively referred to as the “Protocol Claims”) and procedures for the resolution of such claims.

To facilitate the sharing of information, there will be a monthly meeting between the Applicants, Monitor and U.S. Debtors to review the Protocol Claims.

For purposes of the Cross-Border Claims Protocol, the following definitions apply:

a) Overlapping Claims – a claim or portion thereof that (i) has been filed in both the Canadian Proceedings and the Chapter 11 Cases; (ii) by the same party or by the same affiliated parties; and (iii) arises from the same underlying claim, action, liability, property, agreement, lease, debt or transaction. For the avoidance of doubt, the definition of Overlapping Claims shall include, but not be limited to: (i) any guarantee and indemnity claims where the direct claim is filed against a debtor in one jurisdiction and the guarantee or indemnity claim is filed against a debtor in the other jurisdiction; and (ii) duplicate claims filed in both jurisdictions (claims filed in both jurisdictions by the same of affiliated party asserting the same amount and underlying liability); and

b) Same-Creditor Claims – a claim or portion thereof that: (i) has been filed in both the Canadian Proceedings and the Chapter 11 Cases; (ii) by the same party or by the same affiliated parties; and (iii) is not an Overlapping Claim.

For purposes of the Cross-Border Claims Protocol, there are claims that specifically do not constitute Overlapping Claims or Same-Creditor Claims, including certain claims related to the U.K. pension plan, Canadian pension liabilities and employee related matters.

With respect to Protocol Claims, the Applicants, Monitor, and U.S. Debtors will comply with the consultation procedures set forth in the Cross-Border Claims Protocol and attempt to cooperatively resolve such claims. Failing a cooperative resolution, the Applicants and the Monitor, on one hand, and U.S. Debtors, on the other, may seek resolution of such claims in compliance with their respective claims resolution orders and procedures with the exception of Overlapping Claims in excess of $1 million (“Material Overlapping Claims”). With respect to Material Overlapping Claims (except bond claims), where the U.S. Debtors, Monitor and the Applicants cannot agree on an appropriate resolution, they shall seek direction from both this Honourable Court and the U.S. Court regarding the resolution of such claims.

With respect to the bond claims, if the Monitor and the Applicants, on the one hand, or the U.S. Debtors, on the other, proposes to allow, stipulate or settle the bond claims (the “Settlement”) and after consulting with the other party with respect to such Settlement as provided for in the Cross-Border Claims Protocol, the party not proposing such Settlement does not agree with such Settlement, such party may request that the hearing to allow the Bond Claims in the Settlement be a joint hearing.

The Cross-Border Claims Protocol also contains certain general provisions, including provisions dealing with rights of parties to appear and be heard by this Honourable Court and the U.S. Court and the preservation of parties’ rights.