March 20 (Reuters) - Nortel Networks Inc, a former telecoms company that is liquidating in bankruptcy, won a dismissal of some claims by European affiliates that were seeking a large chunk of the company’s $9 billion cash pile.
Nortel’s British, Irish and French affiliates had sought more than $3 billion, claiming Nortel Networks Inc has breached its fiduciary duties to the European businesses by stripping them of cash and leaving them insolvent.
A Delaware bankruptcy court dismissed those claims in part because Nortel Networks, or NNI, was not a director of the European affiliates.
“There is no existing legal basis upon which the court can impose liability for breaches of fiduciary duty upon NNI,” wrote Kevin Gross in a 62-page opinion.
He ordered the European affiliates, which are under the control of insolvency administrators in Europe, into mediation with Nortel on their remaining claims.
Since filing for bankruptcy in January 2009, Nortel has auctioned all of its significant assets, but battle lines have formed over how to distribute the company’s huge pile of cash.
The administrators can still proceed with claims that Nortel Networks aided and abetted in the mismanagement of the European affiliates, according to Gross’s ruling. However, the judge described the claims as weak and unlikely to succeed.
Gross ordered the parties to mediation overseen by Warren Winkler, the chief justice of Ontario.
Attorneys for Nortel and claimants did not immediately return calls for comment.