Nortel Wins Approval for Settlement of Retiree BenefitsSteven Church
Nortel Networks Inc., the defunct telecommunications company, won court approval of a process that would settle a legal dispute with retirees in April by paying $66.9 million for medical and other benefits.
U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, approved Nortel’s request to send former workers details on the proposed accord, negotiated with a retirees committee. The company will return in April to ask for final approval of the settlement after individual retirees have a chance to object.
“I will note it is an extremely carefully negotiated” deal, Gross said. The proposal “appears to be a very, very remarkable settlement.”
The accord would apply to Nortel’s U.S. employees. It comes a day after a mediator in Toronto extended talks between the company’s U.S. and Canadian units and court-appointed administrators for European units, including those representing retirees in the U.K.
The talks pit Nortel bondholders against U.K. bankruptcy administrators who claim Nortel’s U.S. units should pay $2.67 billion to cover as many as 38,000 retirees. The talks center on how units that filed bankruptcy in Europe, the U.S. and Canada should split $9 billion in cash raised by liquidation sales in the U.S.
Nortel, based in Mississauga, Ontario, filed for bankruptcy in the U.K., France and Toronto, Delaware, in 2009 with various units under the control of separate teams of lawyers and under the jurisdiction of different courts.
The company’s 10.75 percent bonds that mature in 2016 lost about 1 percent today, falling to 116.69 cents on the dollar, according to Trace, the bond-price reporting system of the of the Financial Industry Regulatory Authority.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).