Nortel Networks bankruptcy still not over

[tengen]

As a Canadian, the current Blackberry disaster brings back bad memories of Nortel (I once foolishly bought Nortel shares and took a big haircut, I've never owned any BBRY). So I did a bit of googling to see how things settled out for Nortel and found out that the court proceeding are still going on over 4 years after the company declared bankruptcy. The sale of assets produced roughly $7.3 billion, which is currently being held in escrow. According to an article in the FInancial Post (see link below), legal fees for the various parties currently total $915 million!

 

http://business.financialpost.com/2013/06/24/nortel-bankruptcy-fees/

[FFHWatcher]

So, perhaps we need to be investing in law firms?  They never lose, do they? ;)

(Of course, lawyers would just maximize payouts to themselves, leaving little or nothing for shareholders)

 

[Kraven]

So, perhaps we need to be investing in law firms?  They never lose, do they? ;)

(Of course, lawyers would just maximize payouts to themselves, leaving little or nothing for shareholders)

 

This is a common sentiment, but one which really doesn't make sense to me.  Lawyers are hired to do a job.  The fees are not a mystery.  Should the work be done for free?  Really this is more a reflection of distaste for lawyers.  I mean no one says "the only ones who get anything out of helping sick people are the doctors!  They make all the money and all that happens is that sick people get better."

[BG2008]

I have noticed that there is a divide between the smaller bankruptcies and the largers one.  The Trustees/lawyers for the smaller BK tend to charge reasonable fees.  Some even agree to work on a % of payout.  Then there are the $50+mm bankruptcy cases where the lawyers literally will cost you an arm and a leg.  You pray that they wrap things up quickly.  Their reimbursable expenses can be quite extravagant as well. 

[CorpRaider]

I've had occasion to speak to one of the guys working on this bankruptcy in the last few weeks and even they are sick of these proceedings!  There was alot of value in the IP portfolio though, if Nortel could have somehow sold the assets prior to filing...I'd rather buy stock in the big 4, those guys do most of the particing of law anyways.  heh.  I've heard some Big 4 firms double their rates for bankruptcy work. 

[constructive]

So, perhaps we need to be investing in law firms?  They never lose, do they? ;)

(Of course, lawyers would just maximize payouts to themselves, leaving little or nothing for shareholders)

 

Speaking of which, publicly traded law firms do exist - in Australia. And as you might expect, they appear to be good businesses.

 

http://markets.ft.com/research/Markets/Tearsheets/Financials?s=SGH:ASX

http://www.slatergordon.co.uk/

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=SHJ:ASX

http://www.shine.com.au/

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=IMF:ASX

http://www.imf.com.au/