CNELTD Announces Negotiated Deal with Nortel and the Monitor
- continuation of disability income benefits, medical, life and dental benefits for disabled employees until December 31, 2010; - for all defined benefit pension plan members, including those on long term disability, continuation and current service funding of the pension plans until the end of September, 2010; - continuation of medical, life and dental benefits to pensioners until December 31, 2010; - continuation of survivor income and survivor transition income benefits until December 31,2010; - a lump sum payment of up to $3,000 to eligible employees terminated without severance pay as an advance against their claims under CCAA, to a total maximum of $4.2 million;
With the exception of retiree life benefits, none of these payments will be made from the health and welfare trust assets. The Agreement does not affect the discussions that are already underway to determine the allocation of the assets in the health and welfare trust, and we anticipate a resolution of the allocation of those trust assets prior to
The employment of disabled employees will be formally terminated effective
According to
Among the many benefits of the deal, it gives us:
- a priority cash distribution ahead of other Canadian creditors, without giving up our rights to claim preferred creditor status if the BIA is amended, and without depleting the assets of the Health and Welfare Trust to pay our income benefits; - a significant period of certainty and stability to plan for the future, and an opportunity to continue our work with the NRPC to explore ways to continue a very basic group health plan after December 31, 2010; and - time for the Ontario Government to implement the Ontario Pension Agency (OPA), which could increase the value of our pensions.
We expect that the allocation of the assets in the Health and Welfare Trust during 2010 will provide disabled employees with a source of income while the rest of the claims process unfolds.
The Agreement also contains an acknowledgment that the claims of disabled, continuing and former employees and pensioners of Nortel are unsecured claims, and rank in equal priority with those of all other unsecured creditors, including the bondholders. If Nortel and its creditors later become subject to the Bankruptcy and Insolvency Act, this Agreement will not restrict us from arguing that the provisions of that Act will apply, including any priorities then in place.
Further, there is an agreement by the disabled employees, pensioners and former employees not to pursue claims based on the administration or funding of the pension plan or health and welfare trust against Nortel (in its capacity as administrator), the trustee of the health and welfare trust, and Nortel's directors. Claims for fraud, and misrepresentation against the directors, are expressly preserved. Finally, in recognition of the priority payments from the
A letter describing the settlement will be sent to all disabled employees, pensioners and former employees of Nortel on or before
A motion before the CCAA judge to approve the Agreement has been scheduled for
If you wish to oppose the Agreement, you must ensure that the Monitor receives your Notice of Appearance by
The CNELTD Legal Steering Committee and the Representative fully support the Agreement as it reduces the uncertainty for the disabled employees about their benefits in 2010 and gives them more time to prepare for their futures after Nortel's insolvency.
For further information: For further information: Media contacts: Susan Kennedy, (613) 620-1708 (English), Johanne Berube, (613) 523-8185 (French or English); Kevin LeBlanc, (613) 820-9423 (French or English)
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