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.