Verizon Wins $9.5 Billion Spinoff-Lawsuit- USB

Northern, WI 1/24/2013 (avauncer) – Verizon Communications Inc. (NYSE:VZ) is all set for victory in its lawsuit against Idearc Inc. over the latter’s 2006 spin-off with its directory business. A federal judge while ruling in Verizon’s favor remarked that the business was not insolvent at the time the deal was made.

US District Judge, Joe Fish said yesterday that Idearc’s valuation of $12 billion, when it was spun off,was reliable proof that the company was still solvent.

Judge Fish asked U.S. Bancorp (NYSE:USB), the company that sued Verizon Communications Inc. (NYSE:VZ)on behalf of Idearc investors, to show cause why its accusations should be sustained even after the court ruling on the company’s assessment. It also said that the creditors were not able to substantiate their claims with proof.

Idearc, which is now named SuperMedia Inc., finalized a bankruptcy restructuring that gave birth to a trust that would file lawsuits on behalf of the creditors. The claims amount to the tune of $6 billion. The creditors allege that the spinoff was planned in such a way that Verizon stood to gain $9.5 billion but that left Idearc with so much liability that it became insolvent and forced to fold-up after just 28 months.

The hearings in the case against Verizon started in October and comprised of statements from Ivan Seidenberg who previously held the post of chairman and CEO at Verizon Communications Inc. (NYSE:VZ).

Werner Powers, lawyer for Idearc, alleged that Verizon burdened Idearc with so much debt and then “sent it into the market to die.” He also added that the business endured 2-digit drops in all big metropolitan markets. On the other hand, Verizon Communications Inc. (NYSE:VZ)’s lawyer stated that Idearc was not insolvent at that time and was valued at $12.5-$14.5 billion.

A Verizon Communications Inc. (NYSE:VZ) spokesman said they were satisfied with the court’s ruling and look forward to resolving the matter at the earliest.

U.S. Bancorp (NYSE:USB) shares were up 0.27% to $33.09. Verizon Communications Inc. (NYSE:VZ) were down 0.35% to $42.79.