Price isn't right for Nortel division sale

Nortel Networks Corporation has accused Genband of trying to push down the price of its voice over internet protocol and application solutions business, in violation of the original sale agreement.

According to documents filed with the U.S. Bankruptcy Court in Delaware, Nortel said Genband originally agreed to buy its CVAS business for $179.5 million and is now trying to reduce that price to $142.9 million. Nortel said Genband's reasoning is based on a deferred profit amount, which is revenue from services after the closing date.

The Plano, Texas-based Genband, sells telecommunications equipment, like Nortel once did. Nortel, which filed for Chapter 11 Bankruptcy in early 2009, is liquidating its assets in order to pay back creditors. The company still owes creditors billions despite selling off many of its businesses, including its optical networking and Ethernet business to Ciena Corp. for a total of $749 million.

The filing from Nortel says Genband has sought to reduce the sale price by ignoring deferred profit and only including services before the closing date. Genband wants to have an arbitrator decide the proper amount. Nortel says there is nothing for an arbitrator to decide as both parties agreed on the deferred profit clause.

Nortel says the U.S. Bankruptcy Court in Delaware as well as a Bankruptcy Court in Ottawa, as the company was based out of Canada, has the proper jurisdiction over the matter, and it should be solved by them, not an arbitrator.

This is a disagreement about the clear terms of the sale agreement - and, in particular, Genband's attempt to disregard those clear terms, Nortel said to Reuters.

Genband did not respond to requests for comment.