Tuesday, February 9, 2010

Nortel Reaches agreement with NRPC on continuing benefits until Sept 2010

A press release today by the NRPC Canada provides details of an agreement reached with Nortel to continue benefits for pensioners and disabled employees. The agreement is still subject to court approval, and will be heard before the court on March 3, 2010 and if fully approved will provide pension funding at 100% until Sept 30th 2010 as well as long term disabled benefits, medical and life insurance benefits in Canada, and a payment up to $3000 for severed employees. The agreement was reached between the court appointed representatives for the pensioners and the employees on long term disability.

As part of the deal it was acknowledged that the claims of disabled, continuing and former employees, and pensioners of Nortel are unsecured claims and rank in equal priority with those of all other unsecured creditors.

This does not restrict the ability to argue for priority under the Bankruptcy and Insolvency Act, if Nortel and its creditors become subject to this act.

The following is from the press release:

The agreement requires payment by Nortel of an estimated $57 million through 2010.
This means:

* For pensioners and their survivors, the continuation of medical, dental and life insurance benefits through 2010;

* for all defined pension plan members, Nortel's continuation and current service funding of the pension plans until September 2010;

* for eligible employees terminated without severance pay, a lump sum payment of up to $3000 as an advance against their claims under the CCAA;

* for employees on long term disability, the continuation of disability income benefits and the continuation of medical, dental, and life insurance benefits through to the end of 2010; and

* for those receiving survivor income and survivor transition benefits, the continuation of those payments through 2010.


  1. New deal stings disabled

    $57-million pact to extend benefits carries conditions By BERT HILL, Canwest New ServiceFebruary 10, 2010

    Connie Walsh, a 42-year-old Nortel Networks Corp. employee on long-term disability, appealed to fellow Nortel employees yesterday not to support a new $57-million deal that extends major benefits, but carries big conditions.

    "I am 42 years old and I have two kids," she said in an emotional appeal to more than 300 Nortel pensioners and former employees in Ottawa.

    "If this is approved, I could lose up to 85 per cent of my benefits. I won't be able to pay my huge medical bills.

    "There are some of us (on LTD) who could die. Please don't let them trample on our rights, because this is not fair." The speech, and the angry walkouts by other LTD recipients, shocked the meeting of former Nortel employees.

    The meeting was called to galvanize pensioner support behind a campaign to reform Canadian corporate restructuring laws by moving severance, pension and other employee claims ahead of major bondholders when companies file for bankruptcy protection.

    The funding was negotiated after U.S. Nortel operations dipped into a $915-million reserve to transfer $191 million to keep cash-strapped Nortel Canada operations afloat.

    But with 90 per cent of Nortel operating lines now in hands of other companies, the U.S. division made it clear there would be no more money beyond March 31.

    In return for commitments to keep paying pensions and benefits for up to 10 months and pay $3,000 severance packages, Nortel Canada got some conditions in return.

    The group of former employees agreed not to sue Nortel executives and directors over the management of pension and health and welfare funds except for any alleged fraud.

    They also agreed not to try to move their claims ahead of other creditors in Canada and around the world when Nortel assets are finally divided.

    Another condition is an agreement not to oppose new retention incentives for remaining Nortel employees.

    Diane Urquhart, an independent financial analyst, said the conditions will make it impossible for lawyers to argue for better treatment for LTD recipients and other vulnerable groups when Nortel assets are divided.

    Sue Kennedy, the official representative of the LTD group in the negotiations, said the unhappy members had not read the full terms of the deal. She said the agreement buys time because the LTD benefits will end Dec. 31, not March 31, if the deal is not approved.

    Urquhart estimated that Nortel creditors will get about 50 cents on the dollar when Nortel assets are finally divided.

    But she said there is no guarantee the division will be equal around the world.

    Urquhart said that if all the cuts to Nortel benefits are implemented, Canadian taxpayers will be hit with $355 million in increased bills ranging from unemployment benefits to guarantee annual income supplements.

    The Nortel deal to extend benefits is subject to court approval March 3 and opponents can seek to be heard.

    The meeting was told that the only way to stop major cuts to Nortel benefits later this year is to reform insolvency rules by lobbying governments at all levels.

    Ottawa Citizen
    © Copyright (c) The Montreal Gazette

    Read more: http://www.montrealgazette.com/business/deal+stings+disabled/2543360/story.html#ixzz0f97Pc5Jv

  2. On 9 Feb10, the program "CBC Morning" on CBC Radio reported on Nortel-NRPC agreement.
    Here is an audio link to that CBC report.


  3. On the 6pm local newscast of 9 Feb10 by CJOH-Ottawa, Paul Brent reported on the Nortel-NRPC agreement.

    Here is the YouTube link for that news report.