Nortel’s insurers pay $228.5 million towards settlment

Insurers for Nortel Networks Corp. will pay $228.5 million toward a proposed shareholder lawsuit settlements. In February, Toronto-based Nortel said it would settle with payments of $575 million cash from reserves and issue 628.7 million common shares as well the Ontario-based company said it would contribute half of any recovered funds relating to lawsuits against former senior officers. In total Nortel had agreed to pay $2.47 billion in order to settle two class action suits related to the bookkeeping scandal. The $228.5 million in new funds recently allocated toward a settlement will be paid in cash reserves, increasing the cash payment to $803.5 million.This settlement is based upon a number of conditions including corporate government improvements and an agreement with insurers to indemnification obligations. The $228.5 million insurance payment will also not be used to reduce the figure that Nortel must pay under the settlement. Currently, a final settlement agreement has not been reached.