'Hallelujah!' Nortel pensioners welcome deal after 7-year fight
Canadian Nortel pensioners, workers to receive 57% of $7.3B split between claimants around globe
That was the subject line in an email sent out by Nortel pensioner Frank Mills this week after a deal was finally struck to end years of legal fighting over $7.3 billion US in assets set aside following the company's 2009 bankruptcy.
Mills — who retired from Nortel in the 1990s after a 35-year career — sent the email to Nortel's pensioners, who've been waiting more than seven years to receive their due.
"It's been a long struggle," he said.
The settlement deal still requires court approval, but would give Nortel's Canadian claimants 57.1 per cent of the money put aside, amounting to more than $4.1 billion, while U.S. creditors would receive 24.4 per cent and European claimants 18.5 per cent.
Originally Canadian Nortel pensioners were offered under 10 cents on the dollar US, but the new deal pushes the pay-out to more than 40 cents on the dollar, according to Mills.
'You've got to stick to your guns'
"The lesson learned is you've got to stick to your guns," said Francois Meunier, another pensioner and a founder of their claimant group, called the Nortel Retirees and Former Employees Protection Committee.
"It would have been easy to accept eight cents on the dollar," he said. "It was not in our make-up to say lets walk away."
Meunier notes a 2015 court ruling had actually handed 62 per cent of remaining assets to Canada, but U.S. creditors appealed and the recently negotiated 57.1 per cent seemed like a good compromise.
"In the end we could have continued court litigation," said Meunier. "That would have meant more time in the courts, with a similar outcome but possibly with less money.
"But we're happy we didn't have to give away the farm to get a deal."
Compromise was necessary, lawyer says
Their lawyer, Mark Zigler, agreed.
"Yes it's a compromise," said Zigler, "but they're in a much better position rather than facing more years of uncertainty."
More than 20,000 Nortel pensioners saw their retirement plans in jeopardy as Nortel foundered in the wake of the 2008 economic recession, leading to bankruptcy in 2009 and launching the seven-year battle over how to divvy up the $7.3 billion US in liquidated assets.
By 2011, the quickly draining Nortel pension fund had to be redistributed by cutting pensioners' cheques.
In Ontario Nortel pensioners received millions of dollars from the government's pension guarantee fund but still saw their pensions cut to 60 per cent of their original amount, with other benefits like health insurance eventually cut off, according to Meunier.
The new agreement would top up Ontario recipients to more than 90 per cent of their original pensions.
Long-term disability claims disappointed with amounts
But not all Canadian claimants are satisfied with the outcome.
About 350 Nortel claimants on long-term disability will get far less, receiving a one-time lump sum of about $100,000, according to Diane Urquhart, a financial analyst who has been volunteering to advocate for the claimants.
Urquhart said all Canadian claimants should be dissatisfied with the deal, because despite getting 57 per cent of the total pie, pensioners, for instance, are only getting 40 cents on the dollar while some U.S. creditors are getting 90 cents.
Meanwhile, even in the U.S., there are voices of discontent.
The Pension Benefit Guaranty Corp., an independent federal agency helping to top up pensions for Nortel's U.S. workforce, said it opposes the deal and is disappointed its pensioners didn't receive thier full claim of $708 million.
"We anticipated that there would be objections from a minority of U.S. creditors and we expect that the majority of the U.S. creditors and the courts will do the right thing and approve a fair and reasonable settlement that ends years of litigation and enjoys the support of Nortel's largest creditor groups worldwide," Zigler responded.
Once approved, Canadian Nortel claimants would likely begin receiving some payment by next summer, Zigler said.