Court green-lights sale of Nortel assets to Avaya

Natalie Apostolou
18 Sep 2009
00:00

US and Canadian bankruptcy courts have approved Avaya’s $915 million acquisition of Nortel’s enterprise assets.

The sale is now expected to close late in the fourth quarter, Nortel said. Avaya won the bidding for the unit this week, beating out Siemens to win the assets.

The approval came after Verizon's attempts to thwart the deal were rejected by a Delaware bankruptcy judge.

Prior to the Nortel asset auction held last weekend, Verizon had raised objections to Avaya’s offer claiming its ownership could jeopardize communications systems of Verizon business customers, including key government agencies.

The carrier claimed that it could pose a significant security threat.

Following a hearing Wednesday morning, however, a judge overruled Verizon's objection. The judge suggested that the objection was premature because the sale had not been approved and no contracts had been assumed or rejected.

He also noted that issues Verizon raised were largely an economic issue, not a public safety issue.

Verizon claimed that Avaya representatives had told the carrier that they did not want to assume the contracts because they include contingent liabilities.

The legal clearance of the Avaya deal follows Nortel's earlier agreement to sell its wireless networks business to Ericsson for $1.13 billion. The Canadian government confirmed on Wednesday that it won't review the sale of Nortel's wireless business to Ericsson under the Investment Canada Act.

RIM had urged the government to review the sale or risk losing out on the benefits from the development of new technology that could become the standard for wireless communications around the world.

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