Tuesday, September 8, 2009

The lawyers prospering from Nortel's bankruptcy

Whilst thousands of retirees and former employees of Nortel wonder if they will ever see any of the money owed to them and fret over future cuts to their pensions and livelihood, the lawyers are circling like vultures around Nortel's carcass and picking off the meat before anyone else can get near it.

On August 26, the Ottawa Citizen reported that Nortel is expected to have professional fees of US$290 million associated with its bankruptcy filings. This is US$104 million higher than the US$186 million professional fees paid in ABCP CCAA restructuring, the largest CCAA case in Canadian history completed on January 19, 2009. Nortel's professional fees will be US$197 million higher than the US$93 million spent in the Stelco CCAA case.

So the final Nortel estate will be almost $300M lower due to the charges by the legal beagles and will reduce the claims of all the deserving creditors. Who monitors and approves those legal fees? Not Ernst & Young. The monitor's role definition states specifically that E&Y is not responsible for checking invoices and costs. So it has to be the board of directors and what's left of management who approve those fees. They certainly seem to be free and easy with our money. But then isn't that what got them into this pickle in the first place? So we shouldn't be surprised. Once again we seem to be victims without any say. Our only recourse is exposing these practices to public scrutiny.

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