Thursday, November 11, 2010

Nortel asset mediation

Since no one can agree on how to split the remaining assets of Nortel between countries it has been handed over to a mediator. Representatives at the mediation discussion will include the unsecured creditors committee, and the UK pension trustee. I presume the bondholders group and the Canadian monitor will also participate.

I have not seen anything listed where the rights of the Canadian pensioners will be spefically defended in these discussions. The UK pension trustee will focus on their claim that the global Nortel estate owes the UK pension fund close to $3B dollars. This claim has been rejected by both the US and Canadian bankruptcy courts and has withstood appeals in both countries.

This approach by the UK trustee is another attempt to grab a large chunk of the Nortel assets and thereby deny US and Canadian creditors (including pensioners) a chance to recoup their losses.

It is totally unreasonable to claim $3B for the UK. That sum is almost three time the combined deficit in the US and Canada pension funds. The UK deficit is almost entirely related to STC which was taken over by Nortel and which created the pension shortfall under UK pension law long before Nortel became involved. If the UK is successful in grabbing more than a fair share of the Nortel assets it is purely legal piracy in my opinion.

The Canadian pension administrator Morneau Sobeco should be acting on our behalf to obtain a seat at that mediation table and fighting to obtain as much as possible for Canadian creditors including the pension trust fund.

No comments:

Post a Comment