Claims against Nortel Process - update

Today I had a helpful discussion with an attorney from Cleary Gottlieb Steen & Hamilton LLP, the law firm representing Nortel. I asked about the claims process and more specifically about what happens if there is a discrepancy. He told me that there will be omnibus hearings at which groups of creditors whose claims differ from Nortel’s will be reviewed by the court. Following these hearings a notification will be sent to the person making the claim showing the Nortel projection of the claim as compared to that submitted.

If the person submitting the claim agrees with Nortel’s estimate, I think the claim will then be fully accepted. If not, it is unclear what the next steps will be, but I think it will require some legal representation to present the basis for the claim before the court.

The NRPC-US steering committee has been negotiating with Nortel’s law firm and Segal to obtain agreement to transmit information from Nortel to Segal so that they can determine the claim amount for each individual. This process would only apply to the paying membership of the NRPC and if successful would mean that the factors used in the calculation would be agreed to before hand by Nortel’s actuaries and Segal’s actuaries. Hence the claim should be the same as what Nortel would estimate. Each individual member of the NRPC-US would have to personally file their own claims, but they will have the information from Segal to use in presenting proof of claim.

The NRPC-US have not yet finalized the details of how this would work but are working to complete the agreement and should have some information sent to their membership in the next few days. Please check www.nnra.org for developments.

For those of you who are not paying members of the NRPC-US and who wish to participate in this process, please check the same website for information on how to join. Because of the shortness of the time frame before the bar date, Sept 30th, the NRPC-US will probably set a deadline beyond which they can’t accept any more members, so that they can have Segal complete the work. Please tell your colleagues to check www.nnra.org or this blog to keep abreast of developments.

This is probably the best way to have a claim made on Nortel that will not be rejected in court. Let’s hope that all the details can be worked out between Nortel and Segal quickly so that we can make this process work for us.

Claims against Nortel Process

In an earlier post I stated that I had received 3 different bar-coded claim forms from Epiq last Friday. In discussions with an Epiq representative this morning (Aug 17th 2009) he told me that two of the three schedule numbers were actually just data base references and that I should file the claim with the schedule number that is listed on their docket 801. He didn’t know why I had received the additional forms but basically told me to forget about them and focus on the one that is recorded.

I took the opportunity to ask him about filing claims for health care and other benefits. He could not give me any specific direction on this, but said that if I thought that I had a claim against Nortel I should file it.

I then asked if there was a process to be followed if Nortel disputed a claim. He told me that Nortel would review all the claims and would then contact the claimant if they disagreed. I asked if any claims were ever rejected outright and he said there have been cases like that but generally the debtor (IE Nortel) would review the claim and contact the claimant if there was disagreement. Given Nortel’s lack of communications with us so far I’m not sure how that will happen.

Following my discussion with Epiq I spoke with a lawyer at Akin Gump, the court appointed legal firm representing all unsecured creditors. He said that he couldn’t give any legal advice but was willing to speak with me in an unofficial capacity and address non specific questions. I asked him about filing for health care, long term care, and insurance now, even though Nortel had not yet ceased those programs. He was not able to state directly what I should do but said that if I felt I had a claim against Nortel I should file it. I asked if Nortel would reject such claims at this point and he said that it would be up to Nortel but at least the claim would be on file.

I then asked it there had ever been a case where a new bar date had been set for different claims and he told me that he had seen that happen before. So it is possible that a different bar date would be established for claims relating to benefits other than pension, or specific compensation such as severance etc.

This chapter 11 process is intentionally vague, loose, and relaxed. Given all this lack of direct advice it seems that there is no clear process in order to keep the creditors in the dark and give the debtor an advantage. Bankruptcy is meant to help the bankrupt company not the creditor so don’t be surprised when Nortel and their lawyers present all sorts of arguments against your claim to try to avoid paying it.