Nortel Mediation Ends in Failure, Pensioners Pay the Price of Bondholder Greed, says CAW
TORONTO, Jan. 25, 2013 /CNW/ - The CAW is expressing outrage at the collapse of mediation efforts over the distribution of Nortel's remaining assets. CAW National President Ken Lewenza said that the needs of former Nortel workers, pensioners and the long term disabled have been disregarded on account of bondholder greed - yet again.
"Despite the efforts of The Honourable Warren K. Winkler, Chief Justice of Ontario, and his team of expert advisors, the mediation that should have determined the distribution of over $9 billion in Nortel's remaining assets ended in failure to the detriment of all those who were hoping this four year case would finally be settled," said Lewenza.
Justice Winkler called an end to the mediation after more than a week of intensive negotiations when he concluded that "further efforts at mediation are no longer worthwhile."
"As with two previous mediations, failure resulted because Nortel bondholders who bought their bonds for 20 cents on the dollar wanted not only the full value of the bonds, amounting to some $4.5 billion, but years of interest on top of that," Lewenza said. "I struggle to imagine a more unjust situation in the case of a bankruptcy, where bondholders expect more than full payment. Canadian pensioners, thousands of whom were CAW members, have suffered over 50 per cent cuts in their pensions, while former employees have lost jobs, health benefits, and disability incomes, since Nortel entered creditor protection in 2009."
"It is inconceivable that Canadian pensioners and disabled employees have to suffer personal hardship so that junk-bond speculators can reap unconscionable profits from utter misery," said Jerry Dias, Assistant to the CAW President. "Sadly, our federal government, who could reform the existing laws and regulations, is allowing this to happen because it's more interested in protecting financial opportunists than the Canadian workers who built Nortel, then watched it fall apart through financial mismanagement."
The CAW now sees the potential for extended litigation before bondholders agree to a fair settlement or Canadian courts take jurisdiction over the entire Nortel case and force a resolution.
"Canadian pensioners and former employees will continue to fight for the economic justice they deserve," said Lewenza.
In the company's heyday in the mid-1980s, the CAW represented approximately 5,000 Nortel workers in five locations.
SOURCE: Canadian Auto Workers Union (CAW)For further information:
Associate Counsel, CAW-Canada