Administrators Meet $7.3 Billion Challenge of Multinational Group’s Collapse
When multinational companies go out of business, huge challenges are presented to insolvency practitioners. The scale of the task they face was revealed by a High Court case involving a once monolithic networking solutions and telecommunications group that had more than 130 subsidiaries in over 100 different countries.
After the group collapsed and filed for insolvency protection, its assets were sold and the proceeds – amounting to about $7.3 billion – were placed in escrow. Despite extensive litigation in different jurisdictions, the group’s administrators had, for seven years after the collapse, encountered intractable difficulties in achieving agreement with creditors as to how those funds should be distributed.
Having at length managed to reach a global settlement of the vast majority of the disputes arising from the group’s insolvency, the administrators of 19 of its corporate members, all of which had their main centre of operations in the UK, sought judicial approval of the compromise.
In granting the application, the Court noted the exceptional circumstances of the case and the momentous nature of the decision. It paid tribute to the administrators for arriving at a commercial solution that gave the group’s creditors a real prospect of recovering their long-standing debts. The settlement remained subject to the approval of the US and Canadian courts.
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