The Nortel Canadian pension administration has been taken over by Morneau Sobeco and they are in the process of working towards determining the wind-up of the pension fund.
In my research into wind-up on the internet I came across the UK process in the document which can be seen at the link below. The document is very detailed with a lot of clear information on what happens during a Pension wind-up in the UK.
http://www.pensionsadvisoryservice.org.uk/occupational_pensions/winding_up
Unfortunately I have not been able to find a document with similar detail on the Canadian process, though I will continue looking.
In the US the registered pension fund was taken over by the PBGC last year and they are administering it and providing pensions as per their rules. Most US pensioners are happy with the process. Some are unhappy since they have had reductions in pension as a result of the PBGC rules. It is possible to determine what happens when the PBGC takes over by examining their site.
Unfortunately in Canada there doesn't appear to be similar clarity and transparency, and as a result many of us are uncertain as to what the actual methodology will be, and how it will be applied. M.S. has placed some summary information on their web-site but it is inadequate to answer many questions posed by pensioners and deferred pensioners as seen on the Yahoo Nortel Pension group site.
The NRPC proposal to extend the life of the fund using alternative methods seems to be a possibility that many of us would prefer, yet the Ontario government and the Canadian Federal government are blocking this approach. Looking through the UK document I see that alternatives to annuities are acceptable in the UK wind-up system.
The Canadian government should do some benchmarking on the US and UK ,at least, and give pensioners better treatment than they currently seem to be doing.
Saturday, October 30, 2010
Tuesday, October 26, 2010
Sale of Carling facility
Ernst and Young, the Canadian monitors, published their 56th report and posted it on their website. The report contains the details behind the process used to sell the Carling R&D buildings.
At the time of entering CCAA and Chapter 11, there were 3000 people working in the Carling facility. Today there are about 200.
The gross sale price is $208M and the final purchaser was determined after a process which attracted 24 possible candidates.
You can look at the details of the sale on the monitor's website in their reports section, #56.
At the time of entering CCAA and Chapter 11, there were 3000 people working in the Carling facility. Today there are about 200.
The gross sale price is $208M and the final purchaser was determined after a process which attracted 24 possible candidates.
You can look at the details of the sale on the monitor's website in their reports section, #56.
Monday, October 25, 2010
Monitor's 55th report on Nortel status
Ernst & Young have posted their 55th report on their website.
The cash position reported is $5.9B cash, with $749 in US, $189M in Canada,$749M in UK and Emea, and $461 APAC for continuing operations.
Some comments by the Monitor.
The Stay Period presently expires on October 29,2010. The Applicants are seeking a 122 day extension of the Stay Period up to and including February 28, 2011. As stated above, based on the cash flow analysis including the assumptions contained therein, the Applicants have sufficient cash resources to fund operations through the requested stay extension.
Termination payments.
On September 17, 1,158 former employees were notified by mail they were eligible for a maximum payment of CAD $3,000 from the Termination Fund. These eligible former employees were requested to confirm their contact information and in certain cases, where service was given prior to 1996, and to elect whether or not to direct part or ll of their payment into an RRSP as an eligible retiring allowance. This had to be completed by October 15, 2010 in order to receive their payment by early November 2010. If this deadline was not met, the payment wil be processed as soon as possible after the confirmation is received by Nortel.
On September 23,2010,279 former employees who were not eligible for a payment from the Termination Fund were notified of being ineligible by maiL.
As of October 15, 2010,78% of former employees who were eligible for a payment from the Termination Fund have returned their confirmation to the Company. It is anticipated these payments wil be processed by early November. The Monitor understands that once these payments are processed, the Company wil attempt to contact those who have not responded in order to reach as many of the eligible former employees as possible.
The cash position reported is $5.9B cash, with $749 in US, $189M in Canada,$749M in UK and Emea, and $461 APAC for continuing operations.
Some comments by the Monitor.
The Stay Period presently expires on October 29,2010. The Applicants are seeking a 122 day extension of the Stay Period up to and including February 28, 2011. As stated above, based on the cash flow analysis including the assumptions contained therein, the Applicants have sufficient cash resources to fund operations through the requested stay extension.
Termination payments.
On September 17, 1,158 former employees were notified by mail they were eligible for a maximum payment of CAD $3,000 from the Termination Fund. These eligible former employees were requested to confirm their contact information and in certain cases, where service was given prior to 1996, and to elect whether or not to direct part or ll of their payment into an RRSP as an eligible retiring allowance. This had to be completed by October 15, 2010 in order to receive their payment by early November 2010. If this deadline was not met, the payment wil be processed as soon as possible after the confirmation is received by Nortel.
On September 23,2010,279 former employees who were not eligible for a payment from the Termination Fund were notified of being ineligible by maiL.
As of October 15, 2010,78% of former employees who were eligible for a payment from the Termination Fund have returned their confirmation to the Company. It is anticipated these payments wil be processed by early November. The Monitor understands that once these payments are processed, the Company wil attempt to contact those who have not responded in order to reach as many of the eligible former employees as possible.
Friday, October 22, 2010
Canadian Pension Check
This is the first month after Nortel stopped administering the Canadian Pension trust fund. Morneau Sobeco is now the administrator of the plan. My Canadian pension check stub arrived as per normal from Northern Trust yesterday indicating that they were paying the same amount into my bank account via direct deposit.
It makes sense that Morneau Sobeco would continue to use Northern Trust at least for a while until they get all the database information established and reviewed. It is also nice to see no reduction yet in the pension amount but that will only be for a short time until Morneau Sobeco is able to complete their analysis of the fund assets and liabilities. So future reductions await us.
It makes sense that Morneau Sobeco would continue to use Northern Trust at least for a while until they get all the database information established and reviewed. It is also nice to see no reduction yet in the pension amount but that will only be for a short time until Morneau Sobeco is able to complete their analysis of the fund assets and liabilities. So future reductions await us.
Wednesday, October 20, 2010
Nortel Canada Pension Funds NOT Mismanaged
The following detail was provided in a letter to the members of the CAW by Barry E. Wadsworth, Associate Counsel for CAW, regarding the rumor being spread by elected Canadian government officials that Nortel's Canadian pension fund was mismanaged.
Saturday, 16 October 2010
In recent weeks, the CAW has held several information sessions for the unionized retirees, terminated and LTD employees regarding the Nortel bankruptcy process. An issue was raised regarding Ontario Finance Minister Duncan's statement that the Nortel pension funds were seriously mismanaged. Barry Wadsworth, CAW Legal Counsel and Court-appointed legal representative for over the 600 Nortel unionized employees, has prepared the following which can be used in your letter writing to your MPP and to Minister Duncan and Premier McGuinty:
Letter from Barry Wadsworth, CAW Legal Counsel
Dear Brothers/Sisters,
I have received a request from one of the individuals who attended one of our Nortel information meetings to provide, as I had promised I would, points to refute the Minister of Finance's statement that the Nortel pension plan was mismanaged. These points are as follows.
1. The underfunding of the pension plan was as a result of Government policy, by way of the Pension Benefits Act, which does not require that companies fund pension plans on a fully funded wind-up basis. That is, the Government should require companies to fully fund pension plans as if they might go bankrupt tomorrow. Instead, the Act allows companies to fund pension plans as if they will go on forever and any momentary underfunding will eventually be paid for over time. If there was a requirement for fully funded wind-up funding, there would never be a need for the Pension Benefit Guarantee Fund or losses to retiree incomes when an underfunded plan is wound-up. The costs would be fully borne by the companies and not by transfers from taxpayers to the PBGF.
2. Moreover, part of the current underfunding resulted from the 2008 - 2009 losses in the stock market and therefore the value of the equities held by the fund. This is not mismangement - the level of equities in the pension plan was in keeping with the guidelines set under the PBA. Many, if not all, defined benefit pension plans suffered the same losses.
3. Part of the current underfunding resulted from the lowering of the interest rates, which resulted in a lowering of the return on the bonds and other instruments held by the pension plan. This is the same as for equities, above.
4. If there really was mismanagement of the pension plan then the Financial Services Commission should have stepped in to protect the assets of the plan from the former administrator, Mercers.
5. I have not seen where the government or FSCO have brought any charges against Mercers under the PBA, nor has Nortel - the payor Company, nor any individual or group of retiree beneficiaries under the Plan. This is likely because there was no mismanagement as alleged by the Minister. The remarks were therefore ill advised and baseless.
Barry E. Wadsworth
Associate Counsel
CAW-Canada Legal Department
Last Updated ( Monday, 18 October 2010 )
Saturday, 16 October 2010
In recent weeks, the CAW has held several information sessions for the unionized retirees, terminated and LTD employees regarding the Nortel bankruptcy process. An issue was raised regarding Ontario Finance Minister Duncan's statement that the Nortel pension funds were seriously mismanaged. Barry Wadsworth, CAW Legal Counsel and Court-appointed legal representative for over the 600 Nortel unionized employees, has prepared the following which can be used in your letter writing to your MPP and to Minister Duncan and Premier McGuinty:
Letter from Barry Wadsworth, CAW Legal Counsel
Dear Brothers/Sisters,
I have received a request from one of the individuals who attended one of our Nortel information meetings to provide, as I had promised I would, points to refute the Minister of Finance's statement that the Nortel pension plan was mismanaged. These points are as follows.
1. The underfunding of the pension plan was as a result of Government policy, by way of the Pension Benefits Act, which does not require that companies fund pension plans on a fully funded wind-up basis. That is, the Government should require companies to fully fund pension plans as if they might go bankrupt tomorrow. Instead, the Act allows companies to fund pension plans as if they will go on forever and any momentary underfunding will eventually be paid for over time. If there was a requirement for fully funded wind-up funding, there would never be a need for the Pension Benefit Guarantee Fund or losses to retiree incomes when an underfunded plan is wound-up. The costs would be fully borne by the companies and not by transfers from taxpayers to the PBGF.
2. Moreover, part of the current underfunding resulted from the 2008 - 2009 losses in the stock market and therefore the value of the equities held by the fund. This is not mismangement - the level of equities in the pension plan was in keeping with the guidelines set under the PBA. Many, if not all, defined benefit pension plans suffered the same losses.
3. Part of the current underfunding resulted from the lowering of the interest rates, which resulted in a lowering of the return on the bonds and other instruments held by the pension plan. This is the same as for equities, above.
4. If there really was mismanagement of the pension plan then the Financial Services Commission should have stepped in to protect the assets of the plan from the former administrator, Mercers.
5. I have not seen where the government or FSCO have brought any charges against Mercers under the PBA, nor has Nortel - the payor Company, nor any individual or group of retiree beneficiaries under the Plan. This is likely because there was no mismanagement as alleged by the Minister. The remarks were therefore ill advised and baseless.
Barry E. Wadsworth
Associate Counsel
CAW-Canada Legal Department
Last Updated ( Monday, 18 October 2010 )
Tuesday, October 19, 2010
Canadian Government to buy Nortel Carling building at bankruptcy price
The following story was published in the Ottawa Citizen last week.
Public Works is set to announce, as early as next week,the purchase of the Nortel Networks campus in west Ottawa for the Department of National Defence, which has wanted for years to consolidate its dozens of offices in the city into several key locations.
The successful purchase of the $150-million Nortel campus will accomplish that goal, government sources say.
DND has been concerned about security, rising rents and aging buildings. The consolidation will also cut costs.
The deal could be announced as early as Monday, but there is concern, however, about how DND employees, many of whom live in Orléans — which some jokingly refer to as CFB Orléans — will take the news.
DND offices are situated in almost 40 locations across the National Capital Region and the move is expected to bring many of those under one roof. The department will continue to operate National Defence headquarters in downtown Ottawa.
Public Works officials said they couldn’t respond to a Citizen request for comment until sometime on Monday or after.
But the head of the Defence Department’s largest union said he had already heard about the department’s move to the Nortel facility, although his organization hasn’t been consulted.
John MacLennan, national president of the Union of National Defence Employees, said his organization is concerned about transportation problems for workers.
“This means Canadian Forces Base Orléans will have to go to work in Kanata,” MacLennan said. “You’re adding on extra time to get to work, from one end of the city to the other and transit services aren’t the best. It’s going to be a challenge for a lot of people.”
MacLennan said the department has more than 9,000 employees in the capital region.
There are already indications that the move for DND offices is being planned.
On Thursday, a top Public Works and Government Services Canada official confirmed that the federal government plans to empty one million square feet of office space in downtown Ottawa.
Claude Séguin, the director general of portfolio management for Public Works and Government Services, told a commercial real-estate conference that the government will leave Centretown office space, equal to 10 per cent of current federal space and about the size of L’Esplanade Laurier, over the next three to five years.
When asked about the Nortel property, Séguin responded: “We have been engaged in the bidding process and at this time it would be premature to say more. There is no agreement in place and we will have no further comment.”
Five years ago, the Defence Department had plans to vacate its various offices downtown and consolidate those into several central existing locations, including in the Louis St.-Laurent Building in Gatineau and in an office complex on Star Top Road. The third main site would have been the JDS Uniphase complex on Merivale Road.
DND eventually had to scrape the acquisition of the JDS complex and the RCMP moved into the campus.
The negotiations to sell the Nortel campus have been underway since the spring. Bidding by private- and public-sector contenders is believed to have gone through two rounds.
Nortel is believed to be seeking $150 million, a price that some think is high.
The federal government has always been seen as the most logical candidate for the 1.7 million square feet of office space. But the government was expected to sign a long-term lease and let private-sector managers and investors provide the financing to buy, renovate and manage the property.
Minto Developments led this approach when it bought the former JDS Uniphase campus for lease to the RCMP.
But Séguin said “we are not contemplating leasing” (the Nortel campus) because of “specific government needs.”
Some experts think the government may be trying to buy the Nortel campus at depressed bankruptcy prices, an approach that worked with some other Nortel properties that it now occupies.
With files from Bert Hill
© Copyright (c) The Ottawa Citizen
Public Works is set to announce, as early as next week,the purchase of the Nortel Networks campus in west Ottawa for the Department of National Defence, which has wanted for years to consolidate its dozens of offices in the city into several key locations.
The successful purchase of the $150-million Nortel campus will accomplish that goal, government sources say.
DND has been concerned about security, rising rents and aging buildings. The consolidation will also cut costs.
The deal could be announced as early as Monday, but there is concern, however, about how DND employees, many of whom live in Orléans — which some jokingly refer to as CFB Orléans — will take the news.
DND offices are situated in almost 40 locations across the National Capital Region and the move is expected to bring many of those under one roof. The department will continue to operate National Defence headquarters in downtown Ottawa.
Public Works officials said they couldn’t respond to a Citizen request for comment until sometime on Monday or after.
But the head of the Defence Department’s largest union said he had already heard about the department’s move to the Nortel facility, although his organization hasn’t been consulted.
John MacLennan, national president of the Union of National Defence Employees, said his organization is concerned about transportation problems for workers.
“This means Canadian Forces Base Orléans will have to go to work in Kanata,” MacLennan said. “You’re adding on extra time to get to work, from one end of the city to the other and transit services aren’t the best. It’s going to be a challenge for a lot of people.”
MacLennan said the department has more than 9,000 employees in the capital region.
There are already indications that the move for DND offices is being planned.
On Thursday, a top Public Works and Government Services Canada official confirmed that the federal government plans to empty one million square feet of office space in downtown Ottawa.
Claude Séguin, the director general of portfolio management for Public Works and Government Services, told a commercial real-estate conference that the government will leave Centretown office space, equal to 10 per cent of current federal space and about the size of L’Esplanade Laurier, over the next three to five years.
When asked about the Nortel property, Séguin responded: “We have been engaged in the bidding process and at this time it would be premature to say more. There is no agreement in place and we will have no further comment.”
Five years ago, the Defence Department had plans to vacate its various offices downtown and consolidate those into several central existing locations, including in the Louis St.-Laurent Building in Gatineau and in an office complex on Star Top Road. The third main site would have been the JDS Uniphase complex on Merivale Road.
DND eventually had to scrape the acquisition of the JDS complex and the RCMP moved into the campus.
The negotiations to sell the Nortel campus have been underway since the spring. Bidding by private- and public-sector contenders is believed to have gone through two rounds.
Nortel is believed to be seeking $150 million, a price that some think is high.
The federal government has always been seen as the most logical candidate for the 1.7 million square feet of office space. But the government was expected to sign a long-term lease and let private-sector managers and investors provide the financing to buy, renovate and manage the property.
Minto Developments led this approach when it bought the former JDS Uniphase campus for lease to the RCMP.
But Séguin said “we are not contemplating leasing” (the Nortel campus) because of “specific government needs.”
Some experts think the government may be trying to buy the Nortel campus at depressed bankruptcy prices, an approach that worked with some other Nortel properties that it now occupies.
With files from Bert Hill
© Copyright (c) The Ottawa Citizen
Monday, October 18, 2010
NRPC September newsletter
The Canadian NRPC published a newsletter on their website for September 2010.
The following is the NRPC President Don Sproule's summary.
NRPC Newsletter – Sept. 2010
President’s Letter
A big thank you goes out to over 2000 people who turned up at Queen’s Park on Sept. 15th. You came by the busload from Ottawa, Kingston, Belleville, Brampton, London, Hamilton and Kitchener. Many more drove in from across the GTA. And thanks to the Canadian Federation of Pensioners and the CAW for their support. The large turnout demonstrated to the Ontario government that we will not be silent on the issue of winding up our plan by annuities.
After the rally, Mike Moorcroft and I then proceeded into the Legislature where we were introduced in the Assembly. The first 8000 of our petitions were broken up into two lots, with Yasir Naqvi, my MPP, tabling the first 4000 and Mike's MPP, Charles Sousa, tabling the next 4000 petitions to demand that the Government not wind-up our pension funds with annuities. Since that event, Minster Duncan has indicated that he will not consider our proposed alternative for several unsubstantiated reasons. NRPC representatives had an opportunity on Sept. 23 to speak with Minister Duncan and Premier McGuinty to explain why it will be financial suicide to lock in our losses at this critical low performance level for annuities. We are also requesting their cooperation to complete the Request for Proposal (RFP) process so we have some solid proposals to review with them. Both the Ontario Conservative and NDP parties are very supportive of our proposed alternative and have been keeping the issue alive in Question Period and other legislative venues. Read the Ontario Hansard on-line and see what is happening on our issues. As more petitions roll in, we will also be using them to continue our press on the Government.
For several days, starting on Sept. 29th, the CCAA Court judge will hear a motion on division of the assets of the Health and Welfare Trust (HWT). After careful analysis of the HWT documentation, the court-appointed Monitor recommended that the money in the trust be allocated on a pro rata basis between pensioner life insurance, LTD wage replacement, LTD life insurance, LTD optional life and Survivor Beneficiaries based on their relative claims. Please note that Survivor here refers ONLY to spouses of individuals who died while in active employment by Nortel. It does NOT apply to those spouses of individuals who died as pensioners. After careful, reasoned and principled analysis, your court representatives, the court representatives of the LTD group and the CAW counsel all support that recommendation. While final tabulations will not be made until December 31, 2010, if the Monitor’s recommendation is approved, distributions would be similar to the following estimates:
- $35.05M for Pensioner life insurance
- $30.30M for LTD wage replacement, life insurance and optional life
- $ 6.85M for Survivor Beneficiaries
Outside the courts, the Financial Services Commission of Ontario (FSCO) has just announced that the Morneau Sobeco company will be the Administrator of our pension funds for the wind-up process starting Oct 1, 2010. They must evaluate the plans’ assets and determine the liabilities as of Oct 1, 2010, and then calculate the actual wind-up level of the plan. It is our understanding that no reduction of our pensions will take place until the new Administrator has had time to evaluate the funding level of the plan as of Oct 1, 2010. We expect this analysis to take 4-6 months, if not longer. At that time, they will then present a wind-up plan that must receive approval of the Superintendent of Pensions. In the interim, we will be pursuing ways of ensuring that the plans’ assets are not put into annuities. We will continue to express our strong concern that the fate of all pensioners across Canada must be considered. In addition, we will continue to pursue tax related considerations with the Federal Government to minimize the impact on any lump sum payments resulting from funds disbursement.
Don Sproule
The following is the NRPC President Don Sproule's summary.
NRPC Newsletter – Sept. 2010
President’s Letter
A big thank you goes out to over 2000 people who turned up at Queen’s Park on Sept. 15th. You came by the busload from Ottawa, Kingston, Belleville, Brampton, London, Hamilton and Kitchener. Many more drove in from across the GTA. And thanks to the Canadian Federation of Pensioners and the CAW for their support. The large turnout demonstrated to the Ontario government that we will not be silent on the issue of winding up our plan by annuities.
After the rally, Mike Moorcroft and I then proceeded into the Legislature where we were introduced in the Assembly. The first 8000 of our petitions were broken up into two lots, with Yasir Naqvi, my MPP, tabling the first 4000 and Mike's MPP, Charles Sousa, tabling the next 4000 petitions to demand that the Government not wind-up our pension funds with annuities. Since that event, Minster Duncan has indicated that he will not consider our proposed alternative for several unsubstantiated reasons. NRPC representatives had an opportunity on Sept. 23 to speak with Minister Duncan and Premier McGuinty to explain why it will be financial suicide to lock in our losses at this critical low performance level for annuities. We are also requesting their cooperation to complete the Request for Proposal (RFP) process so we have some solid proposals to review with them. Both the Ontario Conservative and NDP parties are very supportive of our proposed alternative and have been keeping the issue alive in Question Period and other legislative venues. Read the Ontario Hansard on-line and see what is happening on our issues. As more petitions roll in, we will also be using them to continue our press on the Government.
For several days, starting on Sept. 29th, the CCAA Court judge will hear a motion on division of the assets of the Health and Welfare Trust (HWT). After careful analysis of the HWT documentation, the court-appointed Monitor recommended that the money in the trust be allocated on a pro rata basis between pensioner life insurance, LTD wage replacement, LTD life insurance, LTD optional life and Survivor Beneficiaries based on their relative claims. Please note that Survivor here refers ONLY to spouses of individuals who died while in active employment by Nortel. It does NOT apply to those spouses of individuals who died as pensioners. After careful, reasoned and principled analysis, your court representatives, the court representatives of the LTD group and the CAW counsel all support that recommendation. While final tabulations will not be made until December 31, 2010, if the Monitor’s recommendation is approved, distributions would be similar to the following estimates:
- $35.05M for Pensioner life insurance
- $30.30M for LTD wage replacement, life insurance and optional life
- $ 6.85M for Survivor Beneficiaries
Outside the courts, the Financial Services Commission of Ontario (FSCO) has just announced that the Morneau Sobeco company will be the Administrator of our pension funds for the wind-up process starting Oct 1, 2010. They must evaluate the plans’ assets and determine the liabilities as of Oct 1, 2010, and then calculate the actual wind-up level of the plan. It is our understanding that no reduction of our pensions will take place until the new Administrator has had time to evaluate the funding level of the plan as of Oct 1, 2010. We expect this analysis to take 4-6 months, if not longer. At that time, they will then present a wind-up plan that must receive approval of the Superintendent of Pensions. In the interim, we will be pursuing ways of ensuring that the plans’ assets are not put into annuities. We will continue to express our strong concern that the fate of all pensioners across Canada must be considered. In addition, we will continue to pursue tax related considerations with the Federal Government to minimize the impact on any lump sum payments resulting from funds disbursement.
Don Sproule
Saturday, October 16, 2010
Warring Tribes
When Paul Stern became CEO of Nortel back in the late 1980s, he offended many people in Northern Telecom and BNR by referring to us as "warring tribes". Perhaps his observation has come home to roost as Nortel's bankrupt estate is fought over by separate geographic units, and ex-employee groups.
What a sad eulogy for a once magnificent company that inspired the world to go digital and optical and helped put Canada on the map as a leader in research and development and especially in telecommunications technology
The UK pension fund is trying to grab a large share of the estate using a British law that holds a parent company responsible for pension trusts regardless of what country it calls home. Never mind that Nortel found itself responsible for all the STC pension obligations that were let slide by the UK before they were taken over by Nortel. In fact the UK claim alone, is as big as the total USA and Canadian pension trust funds combined. Does that make any sense?
The Canada and the US pensioner and ex-employee groups are suspiciously eyeing one another as they look at the estate pot, thinking that their share could be impacted by the claims of the other. The IRS has its claws into the carcass, as does the CRA, and banks and bondholders in both countries are pushing to ensure that they get paid at the expense of the pensioners in Canada who have no protection unlike those in the USA and the UK.
The Nortel Canada disabled employees are opposing the Canadian pensioners in terms of distribution of the Health and Welfare fund claiming that they should have it all since they were left out in the cold by Nortel who failed to establish a proper trust fund to protect these vulnerable employees. One set of victims fighting to leave another set of victims out of any share, whilst the real villain walks away.
And to cap it all, John Roth, a former CEO has placed a one billion dollar claim on the US estate, citing the possibility that he may get sued for letting the company go down the tubes. Rationalize that one if you can.
Whilst all this in-fighting is going on, the lawyers are cleaning up, charging exorbitant fees and sucking the cash blood out of what's left of Nortel, with the approval of the courts. That's the normal modus operandi of these vultures who know their way around the bankruptcy courts. It doesn't matter that they are eating into the funds that rightfully belong to the ex-employees, disabled employees, and pensioners. They get first pick and they are not shy at grabbing large sections of the money to satisfy their greed.
When we look back on this period of our lives it will be with anger at, and embarrassment for a once proud company and country. Canada could have stepped in and stopped this disaster like it did in supporting GM. Canada could have stepped in and enacted laws to protect disabled employees and pensioners suffering from the bankruptcy of the company they helped build. But Canada turned aside and ignored their plight. It's a stain on Canada's reputation as an honorable and caring country who once prided herself on her concern for the weak and the elderly.
Who now will speak for them, and for us?
What a sad eulogy for a once magnificent company that inspired the world to go digital and optical and helped put Canada on the map as a leader in research and development and especially in telecommunications technology
The UK pension fund is trying to grab a large share of the estate using a British law that holds a parent company responsible for pension trusts regardless of what country it calls home. Never mind that Nortel found itself responsible for all the STC pension obligations that were let slide by the UK before they were taken over by Nortel. In fact the UK claim alone, is as big as the total USA and Canadian pension trust funds combined. Does that make any sense?
The Canada and the US pensioner and ex-employee groups are suspiciously eyeing one another as they look at the estate pot, thinking that their share could be impacted by the claims of the other. The IRS has its claws into the carcass, as does the CRA, and banks and bondholders in both countries are pushing to ensure that they get paid at the expense of the pensioners in Canada who have no protection unlike those in the USA and the UK.
The Nortel Canada disabled employees are opposing the Canadian pensioners in terms of distribution of the Health and Welfare fund claiming that they should have it all since they were left out in the cold by Nortel who failed to establish a proper trust fund to protect these vulnerable employees. One set of victims fighting to leave another set of victims out of any share, whilst the real villain walks away.
And to cap it all, John Roth, a former CEO has placed a one billion dollar claim on the US estate, citing the possibility that he may get sued for letting the company go down the tubes. Rationalize that one if you can.
Whilst all this in-fighting is going on, the lawyers are cleaning up, charging exorbitant fees and sucking the cash blood out of what's left of Nortel, with the approval of the courts. That's the normal modus operandi of these vultures who know their way around the bankruptcy courts. It doesn't matter that they are eating into the funds that rightfully belong to the ex-employees, disabled employees, and pensioners. They get first pick and they are not shy at grabbing large sections of the money to satisfy their greed.
When we look back on this period of our lives it will be with anger at, and embarrassment for a once proud company and country. Canada could have stepped in and stopped this disaster like it did in supporting GM. Canada could have stepped in and enacted laws to protect disabled employees and pensioners suffering from the bankruptcy of the company they helped build. But Canada turned aside and ignored their plight. It's a stain on Canada's reputation as an honorable and caring country who once prided herself on her concern for the weak and the elderly.
Who now will speak for them, and for us?
Thursday, October 14, 2010
Nortel groups warring over estate
Story in the Ottawa Citizen.
Warring Nortel groups turn to mediator to tackle who gets what
By Bert Hill, The Ottawa Citizen October 13, 2010
Nortel Networks is sitting on about $6 billion in cash and assets from the sale of most product lines. However, with billions of dollars more in claims from creditors in Canada, the U.S., Europe and around the world, the battle over division of the modest spoils is intense. Protracted negotiations have failed to generate a settlement.
Now the warring parties are turning to a high-powered Los Angeles lawyer for help. Leyn Phillips, 58, has more than 15 years experience helping Fortune 500 companies find a route out this kind of problem. He is also a former U.S. Federal District Judge and Appeals Court judge whose services don't come cheaply: He gets $1,000 an hour and his Los Angeles firm has charged an upfront $101,250 retainer deal for preparation and five days of alternative dispute settlement magic.
The mediation starts next month, and, if it doesn't work, arbitration by a judge will likely be the final step.
Phillips has some other qualifications that might help in this challenging assignment. He was a top-notch tennis player in his youth who went to the University of Oklahoma on a tennis scholarship. He will be kept busy calling out-of-bound shots in a contest that is long on love (the wrong kind) and perpetual deuces. Watch out for flying racquets and trash talk.
Even if the Nortel assets are divided up, the process won't end soon. The U.S. bankruptcy court in Delaware is booking dates into the spring of 2011, well past the second anniversary of the original bankruptcy filing. One issue is what to do with the millions of pages of Nortel records. Nortel has hired another expensive set of consultants for advice on what to save and what to destroy.
Lawyers for Frank Dunn, the former CEO at the heart of an alleged accounting scandal that sabotaged the company, are objecting. They finally got 22 million pages of Nortel documents after the first batch proved unsearchable by computer, but they also found 30,000 cases of redactions -- removal of key information for privacy and other reasons -- that they want to test. They told the U.S. bankruptcy court that Canadian fraud trial "proceedings will commence in the fall of 2011.''
Read more: http://www.ottawacitizen.com/business/Warring+Nortel+groups+turn+mediator+tackle+gets+what/3661802/story.html?cid=megadrop_story#ixzz12KpvP5Ea
Warring Nortel groups turn to mediator to tackle who gets what
By Bert Hill, The Ottawa Citizen October 13, 2010
Nortel Networks is sitting on about $6 billion in cash and assets from the sale of most product lines. However, with billions of dollars more in claims from creditors in Canada, the U.S., Europe and around the world, the battle over division of the modest spoils is intense. Protracted negotiations have failed to generate a settlement.
Now the warring parties are turning to a high-powered Los Angeles lawyer for help. Leyn Phillips, 58, has more than 15 years experience helping Fortune 500 companies find a route out this kind of problem. He is also a former U.S. Federal District Judge and Appeals Court judge whose services don't come cheaply: He gets $1,000 an hour and his Los Angeles firm has charged an upfront $101,250 retainer deal for preparation and five days of alternative dispute settlement magic.
The mediation starts next month, and, if it doesn't work, arbitration by a judge will likely be the final step.
Phillips has some other qualifications that might help in this challenging assignment. He was a top-notch tennis player in his youth who went to the University of Oklahoma on a tennis scholarship. He will be kept busy calling out-of-bound shots in a contest that is long on love (the wrong kind) and perpetual deuces. Watch out for flying racquets and trash talk.
Even if the Nortel assets are divided up, the process won't end soon. The U.S. bankruptcy court in Delaware is booking dates into the spring of 2011, well past the second anniversary of the original bankruptcy filing. One issue is what to do with the millions of pages of Nortel records. Nortel has hired another expensive set of consultants for advice on what to save and what to destroy.
Lawyers for Frank Dunn, the former CEO at the heart of an alleged accounting scandal that sabotaged the company, are objecting. They finally got 22 million pages of Nortel documents after the first batch proved unsearchable by computer, but they also found 30,000 cases of redactions -- removal of key information for privacy and other reasons -- that they want to test. They told the U.S. bankruptcy court that Canadian fraud trial "proceedings will commence in the fall of 2011.''
Read more: http://www.ottawacitizen.com/business/Warring+Nortel+groups+turn+mediator+tackle+gets+what/3661802/story.html?cid=megadrop_story#ixzz12KpvP5Ea
Tuesday, October 12, 2010
Thankless Canadian Thanksgiving for Nortel Pensioners
Thanksgiving message on the Canadian NRPC website.
* Pensioner and long term disabled medical insurance disappears at the end of the year
* Pension plans have been taken over by the Financial Services Commission of Ontario in October - current and future pensioners can expect cuts of 35% or greater.
* Canada's federal government cares more about foreign junk bond holders than its citizens
* Canada's bankruptcy laws are antiquated and hurt former employees whereas most other G20 countries protect former employees far better than Canada.
* The Ontario government wants to wind up the pension plans by purchasing annuities which will eat away the value of pensions even further
* Life insurance plans are cancelled at the end of the year so they cannot even afford a decent burial.
* Except for a small pre-payment due this year, severance payment for terminated employees will have to wait until the Canadian estate is settled and will likely pay out at cents on the dollar
Employees at other companies are facing similar issues. Isn't it time that Canada protected it's citizens?
* Pensioner and long term disabled medical insurance disappears at the end of the year
* Pension plans have been taken over by the Financial Services Commission of Ontario in October - current and future pensioners can expect cuts of 35% or greater.
* Canada's federal government cares more about foreign junk bond holders than its citizens
* Canada's bankruptcy laws are antiquated and hurt former employees whereas most other G20 countries protect former employees far better than Canada.
* The Ontario government wants to wind up the pension plans by purchasing annuities which will eat away the value of pensions even further
* Life insurance plans are cancelled at the end of the year so they cannot even afford a decent burial.
* Except for a small pre-payment due this year, severance payment for terminated employees will have to wait until the Canadian estate is settled and will likely pay out at cents on the dollar
Employees at other companies are facing similar issues. Isn't it time that Canada protected it's citizens?
Saturday, October 9, 2010
US NRPC update on the withdrawal motion re the VEBA
I received the following email from the NUSRPC regarding the withdrawal of the earlier motion on forming a VEBA.
NUSRPC MEMBERS UPDATE OCTOBER 8, 2010
The NUSRPC is a volunteer organization. Nothing in this e-mail is intended to be, nor should be construed to be, legal or financial advice.
The NUSRPC today filed a motion to withdraw, without prejudice, it's earlier motion to form a VEBA (Voluntary Employee Benefits Association). The NUSRPC has reserved the right to re-file the original motion at a later time when uncertainties surrounding Nortel's bankruptcy have been clarified and when the motion may have a better chance of succeeding.
This decision was taken upon the advice of our attorney who had communicated with Nortel's attorneys and with the court appointed attorney for the Creditors Committee.
Background
Nortel has not yet decided whether to file a plan of reorganization or a plan of bankruptcy.
In addition other major issues regarding distribution of the Nortel Global estate are unresolved and it is unclear whether resolution of these issues can be done quickly or will take a long time, perhaps years. Nortel's options regarding employee benefits differ depending on how long it takes to resolve these major issues and, in turn, on which sort of plan they choose to file. Nortel made it clear to our attorney that if we were to press our motion now, before these other issues were clarified, they would strongly oppose it.
The NUSRPC believes we have little to gain by pressing the issue at this time.
-Since Nortel will need court approval to cancel benefits, either through a bankruptcy filing or a Section 1114 negotiation, we can wait to see which direction events take and respond accordingly. This includes the possibility of re-filing our motion for a VEBA if appropriate.
-In order for the Health Coverage Tax Credit, which makes the VEBA possible, to continue Congress needs to extend the provisions of the existing American Recovery and Reinvestment Act. Whether or not Congress will extend the Act will become clear in the coming months.
The NUSRPC will continue to monitor developments in the bankruptcy proceedings and will inform you as events occur.
NUSRPC MEMBERS UPDATE OCTOBER 8, 2010
The NUSRPC is a volunteer organization. Nothing in this e-mail is intended to be, nor should be construed to be, legal or financial advice.
The NUSRPC today filed a motion to withdraw, without prejudice, it's earlier motion to form a VEBA (Voluntary Employee Benefits Association). The NUSRPC has reserved the right to re-file the original motion at a later time when uncertainties surrounding Nortel's bankruptcy have been clarified and when the motion may have a better chance of succeeding.
This decision was taken upon the advice of our attorney who had communicated with Nortel's attorneys and with the court appointed attorney for the Creditors Committee.
Background
Nortel has not yet decided whether to file a plan of reorganization or a plan of bankruptcy.
In addition other major issues regarding distribution of the Nortel Global estate are unresolved and it is unclear whether resolution of these issues can be done quickly or will take a long time, perhaps years. Nortel's options regarding employee benefits differ depending on how long it takes to resolve these major issues and, in turn, on which sort of plan they choose to file. Nortel made it clear to our attorney that if we were to press our motion now, before these other issues were clarified, they would strongly oppose it.
The NUSRPC believes we have little to gain by pressing the issue at this time.
-Since Nortel will need court approval to cancel benefits, either through a bankruptcy filing or a Section 1114 negotiation, we can wait to see which direction events take and respond accordingly. This includes the possibility of re-filing our motion for a VEBA if appropriate.
-In order for the Health Coverage Tax Credit, which makes the VEBA possible, to continue Congress needs to extend the provisions of the existing American Recovery and Reinvestment Act. Whether or not Congress will extend the Act will become clear in the coming months.
The NUSRPC will continue to monitor developments in the bankruptcy proceedings and will inform you as events occur.
Friday, October 8, 2010
Frank Dunn objects to Nortel' s request to destroy documents
Attorneys on behalf of Frank Dunn, former CEO of Nortel, have filed a motion in the US court objecting to Nortel's request for approval to destroy old documents.
Mr Dunn is in the midst of a legal battle in Canada accused of wrongdoings whilst in control of Nortel and the documents sent to him by Nortel at his request were heavily redacted. Hence he is fighting to keep the documents intact in case he can use any of them in his defence.
His lawyer has filed a motion asking permission to appear before the US court to plead the request.
Mr Dunn is in the midst of a legal battle in Canada accused of wrongdoings whilst in control of Nortel and the documents sent to him by Nortel at his request were heavily redacted. Hence he is fighting to keep the documents intact in case he can use any of them in his defence.
His lawyer has filed a motion asking permission to appear before the US court to plead the request.
Thursday, October 7, 2010
(1)Withdrawal of VEBA motion. (2) UK Pension objection
(1) Simon and Cross, attorneys acting on behalf of the Nortel US Retirement Protection committee have placed a motion before the US court to withdraw the earlier motion seeking approval of a Voluntary Employee Benefit Association.
The docket containing the withdrawal is on the Epiq web site.
There is no reason given for the withdrawal.
(2) The Nortel UK Pension Plan Trust Fund has placed a motion before the US court objecting to Nortel's request for approval to destroy historical documents.
The UK Pension trust fund is claiming $3B should be given to them from Nortel Canada and Nortel US as a secure claim based on UK Law regarding a parent company's pension obligations. The UK trust Fund has place 15 claims on Nortel US as listed on the Epiq web site. There are no values associated with any of the claims.
Earlier the UK Pension fund lost appeals in the US and Canadian courts to be treated in advance of other claimants. Both the US and Canadian courts ruled that the UK law did not apply in the US or Canada. However they are still fighting to get money from the Nortel US and Canada estates.
Considering that the pensioners in the US have a $700M shortfall,and the pensioners in Canada have a $1B shortfall it would seem to me that the UK pension trust fund should stand at the back of the US and Canadian lines.
I think the normal process calls for each country to recognize the claimants in that geography and treat them under the laws of the specific country in which the bankruptcy occurred.
Hence US claimants share in the US estate, Canadian claimants share in the Canadian estate, and UK claimants share in the UK estate.
I sympathize with the UK pensioners, but considering that they are covered to a large extent by the PPF in the UK, and that Canadian pensioners are not covered at all by government pension protection, I think it highly unfair to let the UK pension trust fund get any of the assets in Canada or the US.
The docket containing the withdrawal is on the Epiq web site.
There is no reason given for the withdrawal.
(2) The Nortel UK Pension Plan Trust Fund has placed a motion before the US court objecting to Nortel's request for approval to destroy historical documents.
The UK Pension trust fund is claiming $3B should be given to them from Nortel Canada and Nortel US as a secure claim based on UK Law regarding a parent company's pension obligations. The UK trust Fund has place 15 claims on Nortel US as listed on the Epiq web site. There are no values associated with any of the claims.
Earlier the UK Pension fund lost appeals in the US and Canadian courts to be treated in advance of other claimants. Both the US and Canadian courts ruled that the UK law did not apply in the US or Canada. However they are still fighting to get money from the Nortel US and Canada estates.
Considering that the pensioners in the US have a $700M shortfall,and the pensioners in Canada have a $1B shortfall it would seem to me that the UK pension trust fund should stand at the back of the US and Canadian lines.
I think the normal process calls for each country to recognize the claimants in that geography and treat them under the laws of the specific country in which the bankruptcy occurred.
Hence US claimants share in the US estate, Canadian claimants share in the Canadian estate, and UK claimants share in the UK estate.
I sympathize with the UK pensioners, but considering that they are covered to a large extent by the PPF in the UK, and that Canadian pensioners are not covered at all by government pension protection, I think it highly unfair to let the UK pension trust fund get any of the assets in Canada or the US.
Wednesday, October 6, 2010
PBGF Top-Up eligibility rules
The Morneau Sobeco web site contains some more detailed information on the eligibility of retirees for the Ontario PBGF top-up. For people who terminated employment with Nortel Canada the rules shown below apply.
I am not sure what that means in terms of people who transferred from Nortel Canada to Nortel US and changed their pension plans from the Canadian plan to the US plan. It could be interpreted that transferring from Nortel Canada to join Nortel US was the same as if you had terminated employment with Nortel Canada and been rehired by Nortel US. If that is the case then the following rules may apply to those of who transferred.
In many cases we left Nortel before 1987 and many of us were under 45 years of age at the time of transfer, so that we may not receive any top-up for the Ontario service we had in Nortel's employment.
The rules listed are :
■Where a former member terminated employment prior to 1987...
The PBGF will only apply if the former member was at least 45 years of age and had at least ten years of continuous employment or ten years of continuous pension plan membership at their date of termination from the plan.
■Where a former member terminates employment after 1986...
The PBGF will partially apply only if the former member’s age plus years of employment or pension plan membership equals at least 50 at their date of termination from the plan. If age and service equal 60 or more, the member is eligible for full coverage of the eligible portion of his or her pension. The actual percentage of eligible benefits covered by the PBGF if age and service total between 50 and 60, will vary as shown in the following examples:
Age + Service % of Eligible Benefits Guaranteed
(to a maximum of $1,000 per month)
50 20%
51 28%
52 36%
53 44%
54 52%
55 60%
56 68%
57 76%
58 84%
59 92%
60 100%
Where the PBGF does not apply, benefits are generally paid out of the pension plan at the funded level of the plan.
I am not sure what that means in terms of people who transferred from Nortel Canada to Nortel US and changed their pension plans from the Canadian plan to the US plan. It could be interpreted that transferring from Nortel Canada to join Nortel US was the same as if you had terminated employment with Nortel Canada and been rehired by Nortel US. If that is the case then the following rules may apply to those of who transferred.
In many cases we left Nortel before 1987 and many of us were under 45 years of age at the time of transfer, so that we may not receive any top-up for the Ontario service we had in Nortel's employment.
The rules listed are :
■Where a former member terminated employment prior to 1987...
The PBGF will only apply if the former member was at least 45 years of age and had at least ten years of continuous employment or ten years of continuous pension plan membership at their date of termination from the plan.
■Where a former member terminates employment after 1986...
The PBGF will partially apply only if the former member’s age plus years of employment or pension plan membership equals at least 50 at their date of termination from the plan. If age and service equal 60 or more, the member is eligible for full coverage of the eligible portion of his or her pension. The actual percentage of eligible benefits covered by the PBGF if age and service total between 50 and 60, will vary as shown in the following examples:
Age + Service % of Eligible Benefits Guaranteed
(to a maximum of $1,000 per month)
50 20%
51 28%
52 36%
53 44%
54 52%
55 60%
56 68%
57 76%
58 84%
59 92%
60 100%
Where the PBGF does not apply, benefits are generally paid out of the pension plan at the funded level of the plan.
Tuesday, October 5, 2010
Ontario Legislator support for the alternative to wind up by annuity
Reported on the NRPC site:
Yesterday in the Ontario Legislature, MPP Norm Sterling, Carleton-Mississippi addressed the issue of Nortel pensioners on two occasions. Mr. Sterling has over 1000 Nortel retirees in his riding and has been very supportive of our efforts to have the FSM proposal properly evaluated by the Ministry of Finance.
Mr. Norman W. Sterling: To the Legislative Assembly of Ontario:
PETITIONS
Pension plans
“Whereas the Pension Benefits Act (PBA) regulations for ‘loss of sponsor’ of defined benefit pension plans only permit windup and annuity purchase; and “Whereas in the present economic climate the cost of annuities is at a 25-year high with no relief in sight; “Therefore the purchase of annuities exacerbates the punitive impact of windup on Nortel pension plan members and others in similar situations, and increases the costs passed on to the taxpayers of Ontario;
“We, the undersigned, petition the Legislative Assembly of Ontario as follows: “To amend the PBA regulations to permit the Administrator and the Financial Services Commission of Ontario (FSCO) to apply other options in the ‘loss of sponsor’ scenario which will provide more benefits to Nortel pension plan members and others in similar situations, such as the continuation of the pension plan under responsible financial management by a non-government institution.” Mr. Speaker, I agree with that and I sign the petition.
Oct. 4, 2010 Ontario Legislature
Mr. Norman W. Sterling: The member for Kitchener–Conestoga mentioned in her remarks the pension reform that this government has been undertaking. I’m urging the government to undertake even more pension reform, to accommodate the very desperate situation that Nortel pensioners are finding themselves in.
Members of the Legislature will remember that, almost a year ago, I brought forward to this Legislature a bill that would have allowed the Nortel pensioners to have two choices when their pension found was wound up. One was the present option—the only option—and that is to buy individual annuities. I brought forward a suggestion that the pensioner would have the opportunity to also put their funds, or their portion of the funds, into a registered retirement instrument so that they would be able to avoid the very, very low returns that the Financial Services Commission of Ontario is going to get when they buy individual annuities. That was rejected by the government members, the Liberal members of this Legislative Assembly. All members of the opposition supported that particular endeavour.
As well, the Nortel group has been asking the government to undertake their suggestion to establish a financial services model, which has been successful in other jurisdictions.
Needless to say, we need to have this government trying harder for the Nortel pensioners. They will appreciate the small cheque they get from this, because they’re going to suffer so badly from their losses from the bankruptcy of Nortel. But we need this government to go further for the Nortel pensioners.
Yesterday in the Ontario Legislature, MPP Norm Sterling, Carleton-Mississippi addressed the issue of Nortel pensioners on two occasions. Mr. Sterling has over 1000 Nortel retirees in his riding and has been very supportive of our efforts to have the FSM proposal properly evaluated by the Ministry of Finance.
Mr. Norman W. Sterling: To the Legislative Assembly of Ontario:
PETITIONS
Pension plans
“Whereas the Pension Benefits Act (PBA) regulations for ‘loss of sponsor’ of defined benefit pension plans only permit windup and annuity purchase; and “Whereas in the present economic climate the cost of annuities is at a 25-year high with no relief in sight; “Therefore the purchase of annuities exacerbates the punitive impact of windup on Nortel pension plan members and others in similar situations, and increases the costs passed on to the taxpayers of Ontario;
“We, the undersigned, petition the Legislative Assembly of Ontario as follows: “To amend the PBA regulations to permit the Administrator and the Financial Services Commission of Ontario (FSCO) to apply other options in the ‘loss of sponsor’ scenario which will provide more benefits to Nortel pension plan members and others in similar situations, such as the continuation of the pension plan under responsible financial management by a non-government institution.” Mr. Speaker, I agree with that and I sign the petition.
Oct. 4, 2010 Ontario Legislature
Mr. Norman W. Sterling: The member for Kitchener–Conestoga mentioned in her remarks the pension reform that this government has been undertaking. I’m urging the government to undertake even more pension reform, to accommodate the very desperate situation that Nortel pensioners are finding themselves in.
Members of the Legislature will remember that, almost a year ago, I brought forward to this Legislature a bill that would have allowed the Nortel pensioners to have two choices when their pension found was wound up. One was the present option—the only option—and that is to buy individual annuities. I brought forward a suggestion that the pensioner would have the opportunity to also put their funds, or their portion of the funds, into a registered retirement instrument so that they would be able to avoid the very, very low returns that the Financial Services Commission of Ontario is going to get when they buy individual annuities. That was rejected by the government members, the Liberal members of this Legislative Assembly. All members of the opposition supported that particular endeavour.
As well, the Nortel group has been asking the government to undertake their suggestion to establish a financial services model, which has been successful in other jurisdictions.
Needless to say, we need to have this government trying harder for the Nortel pensioners. They will appreciate the small cheque they get from this, because they’re going to suffer so badly from their losses from the bankruptcy of Nortel. But we need this government to go further for the Nortel pensioners.
Sunday, October 3, 2010
Nortel US- Operating report for August on Epiq Site
Docket number 4056 on the Epiq Web site contains a filing by Nortel US on the monthly operating report from August 1-August 31, 2010.
In the report Nortel US (NNI) states that they have $1.609B in assets made up of $901M in cash $280M in intercompany accounts receivable and $428M in various other assets. NNI also shows $5.901B in liabilities of which $215M are not subject to compromise, and $5.586B are subject to compromise, per NNI’s calculations, and $82M related to discontinued operations.
Within the $5.586B subject to compromise, $3.936B is contingency liability for NNI’s debt guarantee, $427M is pension obligations, and $298M is postretirement obligations other than pension.
I presume the $427M is the shortfall in the pension fund now being administered by the PBGC, and the $298M is the non-qualified, SERP, and other excess pensions that are now part of the claims on NNI.
The PBGC claim listed in Epiq’s claims database is for $593M so there is a difference of opinion there as there probably is with all the other claims.
NNI states that as of August 31, 2010 they have received 7,389 claims asserting approximately $16.326B in aggregate outstanding liquidated claims. So far 1,364 claims have been objected to and 1,199 claims have been resolved, reducing the total by about $200M which is still a long way from what NNI estimates as the value of their liabilities subject to compromise.
In terms of the assets that have been sold, the cash received from the sales is $3.119B and is being held in escrow or in restricted cash in various Nortel entities worldwide.
The following lists the value of the various sales completed:
$1070M CDMS and LTE Access.
$924M ES including Diamondware and NGS shares.
$616M Optical and Carrier Ethernet
$234M Nortel’s share in LGN
$155M CVAS
$67M GSM North America
$21M GSM other
$18M Layer 4-7 Data
$10M Packet
$4M other
In the report Nortel US (NNI) states that they have $1.609B in assets made up of $901M in cash $280M in intercompany accounts receivable and $428M in various other assets. NNI also shows $5.901B in liabilities of which $215M are not subject to compromise, and $5.586B are subject to compromise, per NNI’s calculations, and $82M related to discontinued operations.
Within the $5.586B subject to compromise, $3.936B is contingency liability for NNI’s debt guarantee, $427M is pension obligations, and $298M is postretirement obligations other than pension.
I presume the $427M is the shortfall in the pension fund now being administered by the PBGC, and the $298M is the non-qualified, SERP, and other excess pensions that are now part of the claims on NNI.
The PBGC claim listed in Epiq’s claims database is for $593M so there is a difference of opinion there as there probably is with all the other claims.
NNI states that as of August 31, 2010 they have received 7,389 claims asserting approximately $16.326B in aggregate outstanding liquidated claims. So far 1,364 claims have been objected to and 1,199 claims have been resolved, reducing the total by about $200M which is still a long way from what NNI estimates as the value of their liabilities subject to compromise.
In terms of the assets that have been sold, the cash received from the sales is $3.119B and is being held in escrow or in restricted cash in various Nortel entities worldwide.
The following lists the value of the various sales completed:
$1070M CDMS and LTE Access.
$924M ES including Diamondware and NGS shares.
$616M Optical and Carrier Ethernet
$234M Nortel’s share in LGN
$155M CVAS
$67M GSM North America
$21M GSM other
$18M Layer 4-7 Data
$10M Packet
$4M other
Friday, October 1, 2010
More detail on Morneau Sobeco and the wind up process.
The following web sites provide aditional information about Morneau Sobeco, the Nortel Canada Pension plan administrator.
I have copied some of the information on the wind up process below and you can check other information on th M.S. site in terms of FAQs etc.
https://www.pensionwindups.morneausobeco.com/
https://www.pensionwindups.morneausobeco.com/en/windup_faqs.asp
https://www.pensionwindups.morneausobeco.com/en/windup_process.asp
Wind Up Process:
Initial stage
During the initial stage of our administration, we:
■gather documentation and records;
■become familiar with all aspects of the pension plan;
■inform members and interested parties of our appointment; and
■assume responsibilities for the administration of the pension fund.
Please note, there will be no interruption of pension payments as we assume administration of the pension plan.
Preliminary valuation
One of the first responsibilities in our administration will be the preparation of a preliminary actuarial valuation of the pension plan.
Based on the information we are able to obtain, our actuaries will estimate the wind up funded ratio of the pension plan. Benefits that are being paid to existing retirees may be reduced if the assets of the plan are not sufficient to meet all plan obligations. It may take many months before any reductions are implemented.
Pension Benefits Guarantee Fund (Ontario employment only)
As part of the first steps in the wind up process, we will review documentation to determine if the pension plan qualifies for Pension Benefits Guarantee Fund (“PBGF”) coverage.
If the plan qualifies, we will file an application requesting that the Superintendent of Financial Services (the “Superintendent”) declare that the pension plan is eligible for coverage under the PBGF.
Once the Superintendent issues a declaration that the PBGF is applicable, our actuaries will compile a report to determine the amount of PBGF funding to be requested.
For more information on the PBGF, please see the FAQ page.
Immediate retirement
Members who are eligible for an early or normal retirement pension and who are interested in commencing their pension during the wind up process should contact us.
We will send the member a Request for Retirement Quote form to complete. You may also print a copy of the Request for Retirement Quote form from the Forms page if your plan information is available on this website.
After the preliminary actuarial valuation has been completed and we have received approval from the Superintendent to commence payment of immediate retirement benefits, we will be able to process the member’s request for a retirement quote.
Member information profile (the “Profile”)
Once we have compiled and reviewed our membership records, we will provide each member of the pension plan with a personalized member profile (the “Profile”).
Our Profile will contain information in respect of the member’s service in the pension plan and will be used to verify the accuracy of the member’s personal data and to process the member’s benefit entitlements under the pension plan.
The Wind Up Report
As part of the wind up process, we will submit a recommendation to the appropriate regulatory authority depending on where the pension plan is registered to prepare an order that the pension plan be wound up.
Based on the approved wind up date(s), a final Wind Up Report will be prepared and submitted to the appropriate regulatory authority for their review and approval. This Wind Up Report will contain all members’ final pension benefit entitlements in the pension plan and their individual PBGF coverage, if applicable.
Option forms
Once the Wind Up Report has been approved, we will prepare personalized option forms for each member and former member who is not yet receiving a monthly pension payment from the pension plan.
The personalized option form will set out the pension benefit entitlement and the settlement options available to the member in accordance with the pension plan documents and the applicable legislation and regulations. The member will have an opportunity to advise us of any data corrections that should be made.
Purchasing annuities
In the final stages of our wind up administration, we will purchase annuities through a bidding process from one or more Canadian life insurance companies for pensioners and members who choose the pension option in accordance with the provisions of the pension plan documents and the applicable legislation and regulations.
All pensioners and affected members will be notified of the amount of their monthly annuity and the contact information for the successful insurance company. There will be no interruption to monthly pension payments during the transition period.
Keeping in touch
During the wind up process it is very important that all members keep us informed of any changes in their mailing address, marital status or other personal information that may be relevant to their benefit entitlement.
Please contact us if any of this applicable information changes.
I have copied some of the information on the wind up process below and you can check other information on th M.S. site in terms of FAQs etc.
https://www.pensionwindups.morneausobeco.com/
https://www.pensionwindups.morneausobeco.com/en/windup_faqs.asp
https://www.pensionwindups.morneausobeco.com/en/windup_process.asp
Wind Up Process:
Initial stage
During the initial stage of our administration, we:
■gather documentation and records;
■become familiar with all aspects of the pension plan;
■inform members and interested parties of our appointment; and
■assume responsibilities for the administration of the pension fund.
Please note, there will be no interruption of pension payments as we assume administration of the pension plan.
Preliminary valuation
One of the first responsibilities in our administration will be the preparation of a preliminary actuarial valuation of the pension plan.
Based on the information we are able to obtain, our actuaries will estimate the wind up funded ratio of the pension plan. Benefits that are being paid to existing retirees may be reduced if the assets of the plan are not sufficient to meet all plan obligations. It may take many months before any reductions are implemented.
Pension Benefits Guarantee Fund (Ontario employment only)
As part of the first steps in the wind up process, we will review documentation to determine if the pension plan qualifies for Pension Benefits Guarantee Fund (“PBGF”) coverage.
If the plan qualifies, we will file an application requesting that the Superintendent of Financial Services (the “Superintendent”) declare that the pension plan is eligible for coverage under the PBGF.
Once the Superintendent issues a declaration that the PBGF is applicable, our actuaries will compile a report to determine the amount of PBGF funding to be requested.
For more information on the PBGF, please see the FAQ page.
Immediate retirement
Members who are eligible for an early or normal retirement pension and who are interested in commencing their pension during the wind up process should contact us.
We will send the member a Request for Retirement Quote form to complete. You may also print a copy of the Request for Retirement Quote form from the Forms page if your plan information is available on this website.
After the preliminary actuarial valuation has been completed and we have received approval from the Superintendent to commence payment of immediate retirement benefits, we will be able to process the member’s request for a retirement quote.
Member information profile (the “Profile”)
Once we have compiled and reviewed our membership records, we will provide each member of the pension plan with a personalized member profile (the “Profile”).
Our Profile will contain information in respect of the member’s service in the pension plan and will be used to verify the accuracy of the member’s personal data and to process the member’s benefit entitlements under the pension plan.
The Wind Up Report
As part of the wind up process, we will submit a recommendation to the appropriate regulatory authority depending on where the pension plan is registered to prepare an order that the pension plan be wound up.
Based on the approved wind up date(s), a final Wind Up Report will be prepared and submitted to the appropriate regulatory authority for their review and approval. This Wind Up Report will contain all members’ final pension benefit entitlements in the pension plan and their individual PBGF coverage, if applicable.
Option forms
Once the Wind Up Report has been approved, we will prepare personalized option forms for each member and former member who is not yet receiving a monthly pension payment from the pension plan.
The personalized option form will set out the pension benefit entitlement and the settlement options available to the member in accordance with the pension plan documents and the applicable legislation and regulations. The member will have an opportunity to advise us of any data corrections that should be made.
Purchasing annuities
In the final stages of our wind up administration, we will purchase annuities through a bidding process from one or more Canadian life insurance companies for pensioners and members who choose the pension option in accordance with the provisions of the pension plan documents and the applicable legislation and regulations.
All pensioners and affected members will be notified of the amount of their monthly annuity and the contact information for the successful insurance company. There will be no interruption to monthly pension payments during the transition period.
Keeping in touch
During the wind up process it is very important that all members keep us informed of any changes in their mailing address, marital status or other personal information that may be relevant to their benefit entitlement.
Please contact us if any of this applicable information changes.
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