Legal Featured Article
February 19, 2013
Nortel Gets Settlement Approval for Long-Term Disabled Employees
By Oliver VanDervoort, Contributing Writer
Once thought to be one of the most successful telecommunications equipment makers in the world, Nortel is now going through a lengthy and sometimes rancorous bankruptcy process. Nortel (News - Alert) had a settlement offer with its US based long-term disabled employees approved. The deal with the employees also received preliminary approval from the court that is overseeing the liquidation of the United States assets by the failed company.
The court ruled that the settlement can be mailed out to the approximately 200 disabled employees. Once they receive the proposed settlement, they will have the opportunity to raise objections at a final hearing that will take place on April 30. In the agreement, Nortel said that it would not terminate any of the long-term benefits before May 31, unless they can pay out the group an unsecured claim of $28 million.
Once the settlement is finalized, the disabled employees will receive the claim and they could then sell it in order to fund their benefits long term. This will also free Nortel from any future liability.
Some of the former employees have already raised a couple of objections. The group has called for an independent auditor to be brought in to handle the disbursement of any funds that are a part of a final settlement.
Nortel has been working hard to build up a firewall of cash that will help them pay off all of their incurred debt. The company has already sold all of its operations and that has allowed them to get about $9 billion in cash. Bankruptcy courts in the United States, Canada and Europe are going to be battling for quite a while to decide just how much should be split up. It could be quite a while before we find out exactly how that pot is distributed.
Edited by Brooke Neuman
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