NRPC-US

A few people have sent me notes asking about the NRPC US. I contacted one of the members of the NRPC-US executive committee and the following information is a rough summary of where things stand. It is not an official statement from the NRPC-US, It's just my take on the situation.

Earlier last year,the court in the US did not approve the NRPC-US to sit on the creditor committee because of the low numbers of members and the fact that the PBGC is the representative for the majority of defined pensioners. As a result, the NRPC-US turned its attention to the most pressing issue of its membership; US Claims. The NRPC-US engaged Segal to help determine the claims for the members of the NRPC-US, who then submitted the claims per the approved process. Since then there has been little activity.

Part of the fee paid by a number of people to the NRPC-US was used in the early stages to obtain legal representation, but when the request to sit on the committee was denied by the court, the agreement with the law firm was terminated.

The remainder of the fee for those members who had US claims,was used to engage Segal to work with Nortel to determine the specific personal claims based on Nortel's records for the individual,the interest rates, and actuarial data that Nortel was also using. That activity ensured that claims submitted would be using the same factors as Nortel.

The difference in Federal Pension Insurance between the US and Canada helps explain the heavy activity of the NRPC-Canada and the inability of the NRPC-US to gather large numbers of members. In the US, the PBGC guarantees the defined pensions for retirees and as such most people did not feel there was a need to pursue the matter personally. In Canada however,since retirees have no real protection for their pensions, there was a major need to organize and obtain legal representation to fight for the promised pensions.

In addition, in Canada, once the retirees organize and hire a law firm to represent them, the court will most likely recognize that group and will rule that the legal fees be paid by the company (Nortel).

In the US there is no such situation since the court automatically recognizes the PBGC as the representative, and there is no guarantee that the legal fees would be paid by the company( Nortel . So retirees in the US would have had to foot a very hefty legal bill in order to have organized legal representation. Finally the court decides who sits on the creditor committee and, unless there are thousands of retirees in the group, such as a union like the Delta pilots group, the chance of that is small.

There may be a situation arising shortly however that will need the efforts of an organized group in the US. The health care benefits have been continued to date, but it is unlikely that they will continue too much longer. When Nortel declares that they intend to stop the health care benefits, they will have to seek approval from the court. At that point the judge may rule that there needs to be a 1114 committee established to examine the effects of stopping the health care on the ex-employees.

A representative for the ex-employees is required on the 1114 committee and the judge has the right to appoint one. If a group such as the NRPC-US is considered large enough to represent the ex-employees then it is possible that the judge would recognize the NRPC in that capacity. At that point a law firm could be obtained, and paid for by Nortel, to fight for the rights of ex-employees in terms of their health care benefits.