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Electronics Production | August 01, 2011

Nortel's management to be sued?

On July 1, a prominent league of companies dived into the still smoldering ruins of the Nortel empire. Giants like Microsoft, Apple, Sony, Rim and Ericsson all got their share. But could this mess have been averted?
When the bankruptcy was first filed in 2009 Nortel's debts amounted to some USD 4 billion. The total price paid for the immaterial rights landed at USD 4,5 billion. Now, angry share owners might be willing to sue the company according to patent expert Matt Miskimin, interview by the Swedish newspaper Realtid.se.

The point made is that someone gravely misjudged the value of the immaterial rights, something that could have saved the company earlier on. The value was high enough and could have been used as safety for loans. They could also have sold the patents earlier and used the money to restructure.

Matt Miskimin points to the fact that many board of directors do not have the knowledge required. 20 years ago, a company might have had 80% of its value in fixed assets. Now, it might be as little as 20%.

This is the reason why many shareholders might now be left with the feeling that they got scammed. Something that could in turn lead to the management being sued.

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