Almost ten years after top executives of bankrupt telecom giant Nortel were hit with a proposed shareholder class action, the case concluded today—with the dismissal of all claims against the defendants. Morrison & Foerster represented the defendants, former Nortel CEO Mike Zafirovski and CFO Pavi Binning.
Nortel shareholders filed a proposed class action under federal securities law claims against Mr. Zafirovski and Mr. Binning in 2009, shortly after Nortel filed for bankruptcy protection at the height of the financial crisis. (Nortel was not a defendant in this case.) The complaint alleged that Nortel’s pre-bankruptcy financial projections and accounting were fraudulent.
Today’s ruling by U.S. District Judge Denise Cote, a significant securities decision in the Southern District of New York, rejected those claims, finding that Mr. Zafirovski and Mr. Binning made no material misstatements or omissions and had no intent to defraud Nortel’s investors.
“We are elated to achieve such a good result for our clients and bring an end to this decade-long case,” said Joel Haims, who led the defense team and is the co-chair of MoFo’s Securities Litigation, Enforcement, and White-Collar Defense Group. “We are gratified that the Court rejected the claims against our clients and recognized that they acted in good faith while attempting to navigate Nortel through a historic financial crisis.”
With Nortel, formerly a well-known name in the technology industry, headquartered in Canada, the case involved complex cross-border issues related to Nortel’s Canadian and U.S. bankruptcy proceedings. The case had been stayed due to Nortel’s bankruptcy proceedings, but the Canadian bankruptcy court issued an order in early 2017 to lift the stay, permitting the litigation in the Southern District of New York to continue, leading to the decision today granting the motion to dismiss Morrison & Foerster had filed on behalf of its clients, Mr. Zafirovski and Mr. Binning, and dismissing all claims against them.
The MoFo team on the matter included New York attorneys Joel C. Haims, Jamie A. Levitt, James J. Beha II, Steven T. Rappoport, Christina L. Golden, Lauren Gambier.