Media Release: Ottawa - April 29, 2014, noon
Court Representatives of Nortel’s Former Canadian Employees Request Unfettered Access to Canadian Court Proceedings
While the Nortel insolvency is now in its 6th year, close to 22,000 former employees of Nortel Canada,
including its pensioners and those on long-term disability, have already taken their cuts. Some were immediately after the filing of CCAA status in January 2009, while the most recent round in August 2011 had pensions cut back to 55% to 70% of their former level.
Nortel’s former Canadian employees are now looking to reclaim their share in the allocation of the Nortel global estate, but only on a fair and equitable basis.
While there are many parties involved, the heart of the dispute in Nortel’s global estate pits the former Canadian employees against the current holders of Nortel’s bonds:
- When Nortel went under CCAA protection, the original bondholders quickly sold off their junk-
bond-status bonds at prices as low as approximately 15% of face value.
- Since then, the bonds have changed hands and have traded up, to the extent that the most recent
purchases are well above 100% of face value. These late-in-the-game bond purchases are highly speculative investments by vulture bond funds since there must be an assumption that post-filing interest will be paid to receive more than 100% of the face value.
- Post-filing interest can only be paid if an estate is solvent. In the Nortel case, with insufficient money to go around in all the estates, it is clear that pushing to make the US estate solvent is their best bet. Pushing for solvency of the US estate comes at the detriment of the Canadian estate. US solvency can be targeted by using Canada as a dumping ground for global corporate costs and at the same time claiming that the majority of Nortel’s global corporate assets reside outside of Canada.
- Meanwhile UK pensioners who have state-provided guarantees for their pensions equivalent to $55K/per annum are pressing, at excessive cost, for additional recoveries from the Canadian Estate while Canadian pensioners have been subjected to significant cutbacks. Even optimistic projections of recoveries from the estate would not come close to the pension levels of UK pensioners.
After many failed attempts at mediation, the allocation dispute is now heading to a very costly court case. That litigation will begin on May 12th simultaneously in courts in Toronto and Delaware, with the final statement of positions ending at the end of June.
Better Access to Court Proceedings:
With billions of dollars at stake, and many positions to be argued, the main court room will likely to be full of lawyers. The Canadian court representatives of the former employees need unfettered access to the court proceedings. They have asked for i) court representative access to the proceedings at all times ii) secure video links of court proceedings to Ottawa, Toronto and Montreal for those who can’t attend the court sessions, iii) daily summaries of the event proceedings so that those not attending court can follow the events.
For more information, please contact:
Don Sproule, President, NRPC
François Meunier, Director, Ottawa Region
Anne Clark-Stewart, Director, Communications