In a rare twist, two judges placed pensioners ahead in the line for Nortel’s billions – money their advisors had previously worked to make up for.
Advisors are hoping a precedent has been set that will protect plan members after pensioners received a boost in their battle to receive a share of $7.3 billion of Nortel’s assets thanks to a decision by an American and Canadian judge.
Usually bondholders receive a full payout and lower-ranked pensioners receive a small fraction of what they’re owed, but the judges ruled that the collapsed giant’s remaining billions should be distributed equally among the company’s creditors around the world. This means more money for pensioners and less for its bondholders.
The proportional distribution will end up giving all the creditors about 71 per cent of the return on their claims, according to court filings.
It’s a welcome decision for approximately 20,000 Nortel pensioners in Canada who have seen their benefits significantly restricted since 2009, when the company filed for bankruptcy.
"We're pleasantly surprised," said Mark Zigler of law firm Koskie Minsky LLP, which represents former and retired Nortel employees in Canada, to the Canadian Press.
Despite the decision, he said pensioners still may not receive the full 71 per cent outlined in the court decision.
"We have to figure out all the implications and how the math works," he said. "There's still a lot to do."
The process could be dragged out further should there be an appeal.
The Nortel trial is considered one of the largest bankruptcy cases in Canadian history, with some estimates pegging the cost at nearly US$1.52 billion since early 2009, with about $476 million paid to lawyers.
From 1999 to 2000 at its zenith, Nortel was worth nearly $300 billion, employed more than 90,000 people around the world and was the jewel of Canadian tech companies.
Usually bondholders receive a full payout and lower-ranked pensioners receive a small fraction of what they’re owed, but the judges ruled that the collapsed giant’s remaining billions should be distributed equally among the company’s creditors around the world. This means more money for pensioners and less for its bondholders.
The proportional distribution will end up giving all the creditors about 71 per cent of the return on their claims, according to court filings.
It’s a welcome decision for approximately 20,000 Nortel pensioners in Canada who have seen their benefits significantly restricted since 2009, when the company filed for bankruptcy.
"We're pleasantly surprised," said Mark Zigler of law firm Koskie Minsky LLP, which represents former and retired Nortel employees in Canada, to the Canadian Press.
Despite the decision, he said pensioners still may not receive the full 71 per cent outlined in the court decision.
"We have to figure out all the implications and how the math works," he said. "There's still a lot to do."
The process could be dragged out further should there be an appeal.
The Nortel trial is considered one of the largest bankruptcy cases in Canadian history, with some estimates pegging the cost at nearly US$1.52 billion since early 2009, with about $476 million paid to lawyers.
From 1999 to 2000 at its zenith, Nortel was worth nearly $300 billion, employed more than 90,000 people around the world and was the jewel of Canadian tech companies.
