|
June 7th saw the tabling of a joint Canadian/US Court process that would used to determine how to unlock the global lock boxes filled with the assets from the sale of Nortel’s businesses. There are some $4B of assets to be split amongst the global estates, including the estimated $1B for the sale of Nortel’s Intellectual Property scheduled for June 20th. For this joint Court process, the interests of all the former Canadian employees are represented through the unified voice of the Canadian Creditor’s Committee (CCC). Explicitly, the CCC represents the interests of the NRPC constituency: the Registered Pension Plan claims, other Pensioner claims, Survivor claims, and Terminated claims. It also represents the LTD constituency claims and claims of the Ontario Pension Benefit Guarantee Fund. In this court process the single voice of the CCC is represented by the legal counsel of the CAW, Koskie Minsky, Morneau Shepell, and FSCO. The following announcement by the CAW states the CCC’s and the NRPC’s views on how assets of the global estate should be divided. CAW Proposes Consolidation of Nortel's Global Debts and AssetsCanada NewsWire TORONTO, June 8, 2011 TORONTO, June 8, 2011 /CNW/ - During argument before Ontario's Commercial Court yesterday, the CAW, along with other parties representing Canadian employees and their benefit and pension plans, took the position that the only way to appropriately distribute proceeds from the sale of Nortel's world-wide assets is to share them pro-rata among the claims of its creditors.
This method of distribution, a form of global substantive consolidation, reflects the integrated and interdependent nature of Nortel's world-wide operations before January of 2009, when it filed for bankruptcy protection in Canada, the United States and other jurisdictions around the world.
If accepted by the court when a trial is conducted, likely later this year, pro-rata distribution will result in a fair distribution of the sale proceeds among all of the creditors and a just resolution for the employees who have lost their jobs, retirees facing reductions in their pensions and disabled employees who have lost the incomes and benefits on which they depended.
Although Nortel's headquarters was situated in Canada, before its insolvency it distributed sales proceeds among its global entities to reduce its overall tax burden, with the effect that most of its assets were located outside Canada. However, most of Nortel's debts were either situated in or guaranteed by the Canadian headquarters. As a result, creditors of Nortel's entities around the world are not only making claims in their own jurisdiction, but also against any assets flowing into Canada from the sale of its global business interests. This, essentially, gives them two ways of recouping losses; something which the Canadian only creditors, including those represented by the CAW, do not have.
Pro-rata distribution is not a new concept in insolvency proceedings. It has been used to deal with similarly integrated companies in bothCanada and the United States, and is proposed as a resolution by major creditors in the U.S. proceedings involving Lehman Brothers, another globally integrated company. As such, the proposed pro-rata distribution of Nortel's assets has a reasonable chance of success, giving not only fairness, but also justice to those who have suffered most from Nortel's meltdown.
During the height of Nortel's success in the 1980s, the CAW represented 5,000 Nortel workers.
|
Public News 
