Sunday, April 4, 2010

Article in Ottawa Citizen says LTD people may appeal the Canadian Settlement

Extracted from an article publishedin the Ottawa Citizen on March 30th.

By Bert Hill, The Ottawa Citizen March 30, 2010 10:11 PM

The deal could be challenged in higher courts because some believe it hurts certain groups more than others and surrenders the right of Nortel pensioners and others to benefit from any changes to federal bankruptcy law that might give them a bigger share of Nortel assets.

Koskie Minsky, the law firm representing up to 20,000 Nortel pensioners, long-term disability recipients and other former employees, said the $57 million in benefits could have been cut off or drastically reduced as early as Thursday without the new deal.

That would have hit medical, dental, life insurance and income support for 12,000 Canadian pensioners, 400 long-term disability recipients and the $3,000 severance packages to about 1,200 Canadian employees dismissed in the last 15 months.

In return for extending the benefits to the end of December, Nortel retains the commitment given under the original deal, that the pensioner and employee groups won’t sue over the fact the pension and health and welfare funds are underfunded.

The package was thrown into doubt by an Ontario Superior Court ruling rejecting a condition that would have allowed Nortel pensioners and others to benefit if their political campaign to change bankruptcy laws succeeds.

The court said the right was unfair to other creditors which include major U.S. banks, bondholders and major suppliers.

Under the deal negotiated in Toronto, representatives of pensioners and disabled employees dropped the critical clause.

A representative of many unhappy long-term disabled recipients said they were not able to win any concessions in return for dropping the clause concerning future government action on pensions.

Diane Urquhart, an adviser to some of the 400 disabled recipients, said they will appeal the settlement “because it is an agreement negotiated under duress which gives nine months of benefits but condemns the LTD group to a life of poverty.”

She said the Nortel employee group is in danger of surrendering just as their lengthy campaign to change federal bankruptcy law is gaining traction on Parliament Hill.

“The laws may change but it won’t be any use to the Nortel pensioners. Their leaders are giving up the rights.”

Mark Zigler, the Koskie Minsky lawyer, said opponents are “naive and are being led down the garden path by people who believe that this federal government would ever change legislation to recognize special rights.”

He said there were no other changes or concessions to the employee group in the revised deal.

“This is a very good deal which provides $57 million in benefits to the end of the year, a period that is much longer than in most such cases.

“The judge recognized it was a very good deal. The problem for him was that it was too good because it was not fair to other creditors.”

Zigler said that while others may exercise their right to appeal, it does not make sense. “The alternative is having benefits cut off immediately in order to embark on lengthy and very risky litigation.”

© Copyright (c) The Ottawa Citizen

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