Innovative structure

Client: Nortel
Lead practice area: Finance
Value: US$4.5 billion

As a result of major challenges facing the telecommunications sector and the wider economy, on 14 January 2009 various entities in the global Nortel group entered insolvency processes.

In a filing co-ordinated with Chapter 11 and Companies’ Creditors Arrangement Act processes in the US and Canada respectively, Herbert Smith advised the prospective joint administrators (individuals at Ernst & Young) on the successful applications to an English court for administration orders in relation to 19 companies across Europe under the EC Regulation on Insolvency Proceedings.

Following these orders, a cross-practice Herbert Smith team has advised the joint administrators on the conduct of these administrations, one of the largest and most complex cases emerging from the worldwide downturn.

This includes advising on the continued trading of the companies in administration and the co-ordinated disposals of various parts of Nortel’s global business lines. Each of the disposals was a substantial M&A transaction in its own right and these recently culminated with the sale of the residual IP of the Nortel group for US$4.5billion to a joint bid from Apple, RIM, Microsoft, Sony, Ericsson and EMC.

Herbert Smith continues to advise the joint administrators on all aspects of these administrations, including the negotiations amongst the various global Nortel estates for the allocation of the circa US$7.5 billion proceeds from the various business disposals.