NEW YORK, NY -- (Marketwired) -- 01/10/18 -- Network-1 Technologies, Inc.(NTIP) announced today that it sold its allowed general unsecured claim against Avaya, Inc. ("Avaya") for $6,320,000.
As previously announced in September 2017, Network-1(NTIP) agreed to settle its patent litigation against Avaya, Inc. ("Avaya") pending in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1's(NTIP) Remote Power Patent (U.S. Patent No. 6,218,930). As part of the settlement Avaya entered into a Settlement Agreement and non-exclusive License Agreement for the full term of the Remote Power Patent, which expires in March, 2020. Under the terms of the license, Avaya paid a lump sum amount for sales of certain designated Power over Ethernet ("PoE") products, and a running royalty for other designated PoE products. The products covered by the licenses include those PoE products which comply with the Institute of Electrical and Electronic Engineers ("IEEE") 802.3af and 802.3at Standards.
On January 19, 2017, Avaya, and certain of its affiliates, as debtors (the "Debtors"), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court of the Southern District of New York (the "Bankruptcy Court"). As part of the settlement, Avaya also agreed that Network-1(NTIP) shall have an allowed general unsecured claim ("Allowed Claim") in the amount of $37,500,000, as amended, relating to all acts occurring on or before January 19, 2017.
Under the Debtors' Second Amended Joint Chapter 11 Plan of Reorganization of Avaya Inc. and Its Debtor Affiliates (the "Plan") which was approved by the Bankruptcy Court on November 28, 2017, which became effective on December 15, 2017, the Debtors estimated that the total amount of general unsecured claims that will ultimately be allowed will total approximately $305,000,000 ($305 million) which, based on the treatment of general unsecured creditors therein, would result in estimated recoveries for the holders of general unsecured claims of approximately 18.9%. The Debtors acknowledged in the Plan that depending on its ability to successfully prosecute or otherwise reduce the remaining outstanding claims, the total amount of the general unsecured claims could be substantially higher which would decrease the percentage recoveries to the holders of general unsecured claims, including the Company. In such an event, the amount recovered by Network-1(NTIP) under its Allowed Claim could have been substantially lower than 18.9%.
