Nortel Bankruptcy Judge Sends Pension Dispute to Mediation

Nortel Networks Inc. (NRTLQ), the telecommunications company being liquidated in bankruptcy, won court permission to hire a mediator to try to resolve a dispute over how to wind down its pension plan.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, approved a 60-day mediation period, during which Nortel, once the largest telephone equipment maker in North America, must negotiate with two committees representing retirees and workers who receive disability payments.

Last month, Gross ordered Nortel into mediation with its European units in a larger battle over how to split more than $7 billion the U.S. and Canadian units have collected by selling assets, including 6,000 patents to a group led by Apple Inc. (AAPL) and Microsoft Corp. (MSFT)

The dispute over pension and disability payments will probably be much easier to resolve and shouldn’t interfere with the mediation between the European and U.S. units, said Albert Togut, the lawyer for the committee of Nortel retirees.

“The likelihood is that this is going to be done before the ‘Queen Mother’ of all mediations,” Togut said in court.

Nortel has spent about $20 million on retiree benefits in the past two years, company bankruptcy attorney James Bromley told Gross.

Plan Terminations

The company will eventually need to cancel the pension plan and the program under which disability payments are made to former employees, Lisa G. Beckerman, an attorney for a committee of unsecured creditors, told Gross.

“We are going to have the termination of these plans because at some point there won’t be a company,” she said.

Since filing for bankruptcy in 2009, Nortel, based in Mississauga, Ontario, has sold all of its major businesses and is preparing a plan to divide the proceeds among creditors.

The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in Wilmington at schurch3@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.