Tuesday, March 2, 2010

US court blocks the UK Pension claim.

The following story ran in the Montreal Gazette indicating that the US court had in fact blocked the UK poension claim against Nortel:

http://www.montrealgazette.com/business/British+pension+action+against+Nortel+ha\ lted/2627174/story.html

The following is an excerpt:

The U.S. court has blocked a bid by British pension authorities to start action on a$3.2-billion U.S. claim against Nortel Networks.

The Delaware bankruptcy court issued an order giving Nortel the power to ignore a bid by the British Pensions Regulator seeking payment of a big unfunded liability against the insolvent company's global assets.

Delaware court Judge Kevin Gross said British regulators have to play by U.S. bankruptcy rules because they accepted the jurisdiction of the U.S. courts with
official claims last September.

As a result, he said the British authorities also have to honour a U.S. court ruling, called a stay, which blocks lawsuits and other claims while Nortel operates under bankruptcy protection.

Gross said in a decision that the British plans for a separate claims process in Britain "are deemed void and of no effect."

He said if the British pension authorities proceed with hearings to determine the amount of the British claim against Nortel "participation will be in violation of the automatic stay and subject to sanctions."

The Ontario Superior Court, which heard the same arguments Thursday, is expected to make a similar ruling but no decision is yet available.

The U.S. court heard the arguments Friday and issued the decision late Friday. The two courts are working in tandem on the Nortel insolvency proceedings.

After Nortel entered bankruptcy protection in January 2009, British authorities started examine the underfunded Nortel plan in the process of taking control.

In the claim submitted to the U.S. courts, they estimated the liability at $2.7 billion.

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