Nortel Networks Corp. bondholders will soon know whether a $1 billion settlement with the failed company will pass muster in a U.S. bankruptcy court, Dow Jones Daily Bankruptcy Review reported today. Approval of the settlement, allotting bondholders $1 billion in interest on their investment in Nortel's distressed debt, will have a "direct and substantial" impact on the Canadian company and its creditors — including disabled and retired workers in Canada and Europe — are counting on it for payment, said Ken Coleman, a lawyer for Nortel's Canadian parent company. If the pact fails, it will be a blow to the hedge funds that snapped up Nortel's debt at a steep discount after the company collapsed in 2009. Bond prices indicate investors are expecting payment in full, with much interest.
