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.
Showing posts with label retirees. Show all posts
Showing posts with label retirees. Show all posts
Wednesday, August 19, 2009
Monday, August 17, 2009
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.
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.
Monday, July 13, 2009
Excerpts from the NRPC-US update on 07-10-2009. Includes claims and medical info.
This post is for the benefit of all ex-Nortel employees and retirees and provides excerpts from information that has been sent out by the NRPC-US steering committee to the paying membership of the group. Anyone wishing to join the NRPC-US group and receive the information and support directly can find the pertinent information at www.nnra.org
Chronology of events last 4 weeks.
June 19 Nortel announced that it has entered into an agreement with Nokia Siemens Networks to sell its wireless network infrastructure business assets for US $650 million. Nortel also announced that it was advancing in discussions with external parties to sell its other businesses.
June 26 certain creditors and suppliers of Nortel Networks filed a series of objections to the proposed sale of a business unit to Nokia Siemens Networks.
June 26 the U.S. Pension Benefit Guarantee Board objected to certain provisions of the proposed sale set forth by Nortel and asked the court that they be modified.
June 28 Koskie Minsky, the Canadian law firm appointed by the Canadian court to represent all current and former Canadian employees published a weekly news bulletin which may be found at http://www.kmlaw.ca/Case-Central/Overview/?rid=107.
This bulletin is significant for U.S. pensioners because both the U.S. and the Canadian NRPC groups have retained Segal Co. to assist in calculating and filing claims with the court(s). Koskie Minsky has already received an initial set of Canadian claims information from Nortel and this newsletter contains a good description of how the claims process will proceed. In the U.S. we intend to follow the same or a similar process.
July 6 U.S. private equity firm MatlinPatterson Global Advisors confirmed that it plans to put forward a comprehensive proposal to reorganize the businesses of bankrupt Canadian telecom equipment maker Nortel Networks.
It stated that it “does not believe that the current proposed transaction with Nokia Siemens Networks maximizes value for Nortel stakeholders." and “MatlinPatterson believes Nortel is a solid company with a valuable brand, talented employees and innovative technologies. It is interested in retaining, for current investors, the inherent value of the company rather than merely accepting a 'fire sale' of its core asset followed by the wholesale liquidation of the remaining businesses". A rescue bid would require a debt-for-equity swap and would need to be put forward by July 24, the date set by the bankruptcy courts to consider the $650 million "stalking horse" bid by Nokia Siemens for most of Nortel's core and profitable wireless equipment operations.
July 3 Nortel announced that it was close to a deal to sell one of its key businesses to rival Avaya Inc. The enterprise Business unit was responsible for 20 per cent of Nortel's business last year. The sales would mean that over the course of a single week Nortel had agreed to sell off assets responsible for nearly half its revenue.
July 8 Koskie Minsky published another bulletin containing updates on the Canadian and U.S. court proceedings. (Also available at the site listed above)
Claims
No Bar Date (the date by which our claims must be filed) has been established. Current estimate is still late September. Should Nortel receive court approval to discontinue any employee benefits after the bar date the court would establish another later bar date for the filing of claims resulting from lost benefits. These claims will be more difficult to estimate and calculate than are the pension claims for the initial bar date. Fortunately Segal Co. is also willing and able to help us should this be necessary.
Medical Benefits
Questions continually arise regarding the outlook for our US medical benefits. Although there are no clear answers yet, the process to be followed is becoming clearer.
First, Nortel has an obligation to file a business plan with the court, which must then be approved by the court. Nortel has not done this. Only after the plan is filed and approved may Nortel petition the court to drop medical benefits on the basis that such costs are too burdensome for Nortel to sustain if it is to achieve its business plan.
Should this happen the court must then decide whether to allow Nortel to drop medical benefits after an employee notification period or whether Nortel must first enter into a negotiation with former employees (called a Section 1114 Process). Whether or not the Court will require a Section 1114 process is dependent on the wording of our various pension plans. No one has yet examined the wording regarding benefit cancellations in the various pension plans because copies of all of the plans have not yet been received by the court.
Should the court order a Section 1114 process Nortel would be required to negotiate with a committee of former employees. This negotiation may result in an agreement between Nortel and former employees to allow Nortel to alter reduce or discontinue benefits in exchange for something of value.
If a Section 1114 process occurs, Segal Co. has considerable expertise in advising employee committees on how to obtain the most value from the process. Segal’s fees for assisting us in the Section 1114 Process would be borne by Nortel. Segal has more experience working with former employee groups on Section 1114 Committees than any other firm in North America and has been successful at helping such groups to set up their own comprehensive and affordable health plans.
Another question which arises is about the likelihood of availability of COBRA should Nortel medical coverage end. Nortel is obliged to offer COBRA to all former employees as long as it has any current employees and continues to offer them medical benefits. While COBRA is more expensive than our existing medical coverage, it does provide insurance for an interim period while former employees explore other medical coverage options.
Chronology of events last 4 weeks.
June 19 Nortel announced that it has entered into an agreement with Nokia Siemens Networks to sell its wireless network infrastructure business assets for US $650 million. Nortel also announced that it was advancing in discussions with external parties to sell its other businesses.
June 26 certain creditors and suppliers of Nortel Networks filed a series of objections to the proposed sale of a business unit to Nokia Siemens Networks.
June 26 the U.S. Pension Benefit Guarantee Board objected to certain provisions of the proposed sale set forth by Nortel and asked the court that they be modified.
June 28 Koskie Minsky, the Canadian law firm appointed by the Canadian court to represent all current and former Canadian employees published a weekly news bulletin which may be found at http://www.kmlaw.ca/Case-Central/Overview/?rid=107.
This bulletin is significant for U.S. pensioners because both the U.S. and the Canadian NRPC groups have retained Segal Co. to assist in calculating and filing claims with the court(s). Koskie Minsky has already received an initial set of Canadian claims information from Nortel and this newsletter contains a good description of how the claims process will proceed. In the U.S. we intend to follow the same or a similar process.
July 6 U.S. private equity firm MatlinPatterson Global Advisors confirmed that it plans to put forward a comprehensive proposal to reorganize the businesses of bankrupt Canadian telecom equipment maker Nortel Networks.
It stated that it “does not believe that the current proposed transaction with Nokia Siemens Networks maximizes value for Nortel stakeholders." and “MatlinPatterson believes Nortel is a solid company with a valuable brand, talented employees and innovative technologies. It is interested in retaining, for current investors, the inherent value of the company rather than merely accepting a 'fire sale' of its core asset followed by the wholesale liquidation of the remaining businesses". A rescue bid would require a debt-for-equity swap and would need to be put forward by July 24, the date set by the bankruptcy courts to consider the $650 million "stalking horse" bid by Nokia Siemens for most of Nortel's core and profitable wireless equipment operations.
July 3 Nortel announced that it was close to a deal to sell one of its key businesses to rival Avaya Inc. The enterprise Business unit was responsible for 20 per cent of Nortel's business last year. The sales would mean that over the course of a single week Nortel had agreed to sell off assets responsible for nearly half its revenue.
July 8 Koskie Minsky published another bulletin containing updates on the Canadian and U.S. court proceedings. (Also available at the site listed above)
Claims
No Bar Date (the date by which our claims must be filed) has been established. Current estimate is still late September. Should Nortel receive court approval to discontinue any employee benefits after the bar date the court would establish another later bar date for the filing of claims resulting from lost benefits. These claims will be more difficult to estimate and calculate than are the pension claims for the initial bar date. Fortunately Segal Co. is also willing and able to help us should this be necessary.
Medical Benefits
Questions continually arise regarding the outlook for our US medical benefits. Although there are no clear answers yet, the process to be followed is becoming clearer.
First, Nortel has an obligation to file a business plan with the court, which must then be approved by the court. Nortel has not done this. Only after the plan is filed and approved may Nortel petition the court to drop medical benefits on the basis that such costs are too burdensome for Nortel to sustain if it is to achieve its business plan.
Should this happen the court must then decide whether to allow Nortel to drop medical benefits after an employee notification period or whether Nortel must first enter into a negotiation with former employees (called a Section 1114 Process). Whether or not the Court will require a Section 1114 process is dependent on the wording of our various pension plans. No one has yet examined the wording regarding benefit cancellations in the various pension plans because copies of all of the plans have not yet been received by the court.
Should the court order a Section 1114 process Nortel would be required to negotiate with a committee of former employees. This negotiation may result in an agreement between Nortel and former employees to allow Nortel to alter reduce or discontinue benefits in exchange for something of value.
If a Section 1114 process occurs, Segal Co. has considerable expertise in advising employee committees on how to obtain the most value from the process. Segal’s fees for assisting us in the Section 1114 Process would be borne by Nortel. Segal has more experience working with former employee groups on Section 1114 Committees than any other firm in North America and has been successful at helping such groups to set up their own comprehensive and affordable health plans.
Another question which arises is about the likelihood of availability of COBRA should Nortel medical coverage end. Nortel is obliged to offer COBRA to all former employees as long as it has any current employees and continues to offer them medical benefits. While COBRA is more expensive than our existing medical coverage, it does provide insurance for an interim period while former employees explore other medical coverage options.
Subscribe to:
Posts (Atom)
