Asset allocation

The courts have agreed to further mediation talks and some of the parties involved have been pressing to have their very large claims considered as part of these talks. Frankly I think the size of claims should not have any impact whatsoever on the allocation of assets. It's unfortunate if in Europe the companies that Nortel took over were not keeping the pension funds at adequate levels especially considering the very lenient rules required to retire in some of the European countries. I think the governments of those countries affected should have had proper regulations in place to ensure pension funding. The same applies to Canada. The pension regulations there is antediluvian.

The asset allocation needs to be determined on other attributes like product development history, sales volume, manufacturing supply, number of employees, research funding. Bringing claim size into that picture distorts the formula, in my view, in favor of those who can talk loudest and dream up the best claim stories. How is it possible that EMEA can have claims bigger than the US and Canada combined? That doesn't make any sense. It's clear to me that these claims from EMEA are not Bona Fide.

Judge Gross orders formation of 1114 and 1102 committees

Docket number 5783 on the Epiq site contains the order by Judge Kevin Gross for the US trustee to form a 1114 committee of Nortel retirees who are receiving benefits such as medical and long term care to act on behalf of the retirees to negotiate with Nortel to change or terminate the medical and other retiree benefit plans.

Docket number 5790 contains a similar order for the US trustee to appoint a 1102 committee to represent the Nortel employees on long term disability to act on their behalf in similar negotiations with Nortel regarding the LTD benefits.

The details of the committees are to be presented to the court for approval. There is no statement in terms of timing or the method of selection of the committee representatives. Legal fees for the 1114 committee will be borne by Nortel. A cap of $200,000 has been set in terms of the legal representation for the 1102 committee and will be borne by Nortel also.

This is the first step towards major change to these programs. It will probably take a few months but probably before of by year end.

Nortel US files for formation of 1114 committee

Nortel has filed in the US court for the appointment of a 1114 committee to be established. This is the first step towards eliminating retiree medical and other non pension benefits as well as long term disability benefits. The committee will be staffed with retirees who will represent the interests of those of us who are receiving retiree medical and other benefits. I don't know who will be on that committee yet . I imagine the US NRPC will be involved since they originally were able to stop Nortel from eliminating the benefits unilaterally. Nortel claims it is costing them $12 million per year to keep supporting the medical and LTD programs for retirees and LTD employees. Considering the costs of all the lawyers now involved this seems to me to be a much better use of the estate funds than handing them over to a bunch of legal vultures who have no vested interest in the welfare of retirees or of Nortel for that matter.