IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE In re : Chapter 11 : Bankruptcy Case No. 09-10138(KG) Nortel Networks Inc., et al., : Jointly Administered : Debtors. : : : Nortel Networks Inc., et al., : Appeals from the Bankruptcy Court : Civil Action No. 15-624 (LPS) Appellants and : Civil Action No. 15-586 (LPS) Cross-Appellees, : Civil Action No. 15-622 (LPS) : Civil Action No. 15-623 (LPS) v. : Civil Action No. 15-627 (LPS) : Civil Action No. 15-628 (LPS) Ernst & Young Inc., as Monitor and Foreign : Civil Action No. 15-635 (LPS) Representative of the Canadian Debtors, : Civil Action No. 15-636 (LPS) et al., : Civil Action No. 15-699 (LPS) : Civil Action No. 15-196 (LPS) Appellees and : Civil Action No. 15-197 (LPS) Cross-Appellants. : CONSOLIDATED APPEALS : REPLY AND CROSS-APPEAL RESPONSE BRIEF OF APPELLANT STEPHEN TAYLOR, CONFLICTS ADMINISTRATOR FOR NORTEL NETWORKS S.A. (IN ADMINISTRATION) SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Robert A. Weber 920 North King Street Wilmington, Delaware 19899-0636 - and - George A. Zimmerman Susan L. Saltzstein Four Times Square New York, New York 10036-6522 Attorneys for Appellant Stephen Taylor, Conflicts Administrator for Nortel Networks S.A. (In Administration) TABLE OF CONTENTS PRELIMINARY STATEMENT ................................................................................................. 1 ARGUMENT .............................................................................................................................. 3 I. APPELLEES FAIL TO REBUT—AND IN MOST INSTANCES, FAIL TO ADDRESS—NNSA'S ARGUMENTS FOR REVERSAL. .............................................. 3 A. The Bankruptcy Court Failed To Value NNSA's Assets. ...................................... 3 B. MPR Violates The Versailles Commercial Court Order. ....................................... 7 II. THE APPELLEES FAIL TO DISTINGUISH MPR FROM SUBSTANTIVE CONSOLIDATION......................................................................................................... 8 III. THE COURT LACKS AUTHORITY TO IMPLEMENT MPR. .................................... 10 A. MPR Exceeds The Court's Authority Under Section 105. ................................... 10 B. Appellants' Due Process Rights Were Violated Because Appellants Never Had The Opportunity To Challenge MPR Below. .............................................. 14 IV. NNSA SHOULD NOT BE DEEMED TO HAVE WAIVED ARGUMENTS. ............... 16 V. THE BANKRUPTCY COURT ERRED BY CONDUCTING A JOINT TRIAL WITH A FOREIGN COURT......................................................................................... 19 VI. CROSS APPEALS ........................................................................................................ 22 A. NNSA Does Not Oppose The Joint Administrators' Cross-Appeal. .................... 22 B. The Monitor's Cross-Appeal Should Be Denied. ................................................ 22 C. The CCC's Cross-Appeal Should Be Denied. ..................................................... 24 CONCLUSION ......................................................................................................................... 25 i TABLE OF AUTHORITIES Cases Page(s) Board of Education of Hudson City School District v. Sargeant, Webster, Crenshaw & Folley, 539 N.Y.S.2d 814 (App. Div. 1989) ............................................................................... 18 Boughner v. Secretary of Health, Education & Welfare, 572 F.2d 976 (3d Cir. 1978) ........................................................................................... 18 Carter v. Albert Einstein Medical Center, 804 F.2d 805 (3d Cir. 1986) ........................................................................................... 18 Downey v. Ecore International Inc., [2012] ONCA 480 (Can.) .............................................................................................. 23 Dunbar v. Triangle Lumber & Supply Co., 816 F.2d 126 (3d Cir. 1987) ........................................................................................... 18 Ermini v. Vittori, 758 F.3d 153 (2d Cir. 2014) ............................................................................................. 6 Freifield v. Hennessy, 353 F.2d 97 (3d Cir. 1965) ..................................................................... 19 Glover v. City of Wilmington, 966 F. Supp. 2d 417 (D. Del. 2013) ........................................................................... 4, 11 In re BH & P, Inc., 949 F.2d 1300 (3d Cir. 1991) ......................................................................................... 18 In re BH & P, Inc., 119 B.R. 35 (D.N.J. 1990) .......................................................................... 18 In re Cajun Electric Power Cooperative, Inc., 119 F.3d 349 (5th Cir. 1997) .......................................................................................... 13 In re Combustion Engineering Inc., 391 F.3d 190 (3d Cir. 2004) ........................................................................................... 14 In re Complaint of Bankers Trust Co., 752 F.2d 874 (3d Cir. 1984) ........................................................................................... 16 In re Federal-Mogul Global, Inc., No. 01-10578 AMW, 2002 WL 34946156 (Bankr. D. Del. Feb. 7, 2002) ....................... 21 In re Ionica PLC, 241 B.R. 829 (Bankr. S.D.N.Y. 1999) ............................................................................ 20 ii In re LTV Steel Co., 285 B.R. 259 (Bankr. N.D. Ohio 2002) ...................................................................... 4, 16 In re Morristown & Erie Railroad Co., 885 F.2d 98 (3d Cir. 1989) ............................................................................................. 10 In re Motors Liquidation Co., 430 B.R. 65 (S.D.N.Y. 2010) ......................................................................................... 13 In re Nortel Networks Inc., 737 F.3d 265 (3d Cir. 2013) ........................................................................................... 19 In re Owens Corning, 419 F.3d 195 (3d Cir. 2005) ................................................................................... 6, 9, 11 Johnson v. Zerbst, 304 U.S. 458 (1938) ...................................................................................................... 16 Law v. Siegel, 134 S. Ct. 1188 (2014) ............................................................................................. 10, 12 Lukens Steel Co. v. United Steelworkers of America, 989 F.2d 668 (3d Cir. 1993) ........................................................................................... 22 Martin v. Catholic Diocese of Wilmington, Inc. (In re Catholic Diocese of Wilmington, Inc.), 484 B.R. 629 (D. Del. 2012) .......................................................................................... 10 Maxwell Communication Corp. plc v. Societe Generale (In re Maxwell Communication Corp. plc), 93 F.3d 1036 (2d Cir. 1996) ........................................................................................... 20 Mission Iowa Wind Co. v. Enron Corp. (In re Enron Corp.), 291 B.R. 39 (S.D.N.Y. 2003) ................................................................................. 4, 5, 11 Mullane v. Central Hanover Bank & Trust, Co., 339 U.S. 306 (1950) ...................................................................................................... 15 Official Committee of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548 (3d Cir. 2003) ........................................................................................... 14 Official Committee of Unsecured Creditors v. Transpacific Corp. Ltd. (In re Commodore International, Ltd.), 242 B.R. 243 (Bankr. S.D.N.Y. 1999), aff'd, No. 00CIV.1679(SAS), 2000 WL 977681 (S.D.N.Y. July 17, 2000) ............................................................................ 20 Pension Benefit Guaranty Corp. v. Braniff Airways, Inc. (In re Braniff Airways, Inc.), 700 F.2d 935 (5th Cir. 1983)................................................................................. 13 iii Philadelphia Gear Corp. v. Philadelphia Gear de Mexico, S.A., 44 F.3d 187 (3d Cir. 1994) ............................................................................................... 8 Pope v. Swanson, No. 07-652-GMS, 2009 WL 2507928 (D. Del. Aug. 17, 2009) .................................. 4, 11 Remington Rand Corp.-Delaware v. Business System Inc., 830 F.2d 1260 (3d Cir. 1987) ................................................................................... 23, 24 Rogin v. Bensalem Township, 616 F.2d 680 (3d Cir. 1980) ..................................................................................... 14, 16 Sattva Capital Corp. v. Creston Moly Corp., [2014] S.C.R. 633 (Can.) ......................................................................................... 22, 23 Schroeder v. New Century Liquidating Trust (In re New Century TRS Holdings, Inc.), 407 B.R. 576 (D. Del. 2009) ................................................................................... 9 Stonington Partners, Inc. v. Lernout & Hauspie Speech Products N.V., 310 F.3d 118 (3d Cir. 2002) ........................................................................................... 20 T. Copeland & Sons v. SLM International, Inc. (In re SLM International, Inc.), 248 B.R. 240 (D. Del. 2000) .......................................................................................... 16 Tacynec v. City of Philadelphia,