A settlement between Nortel Networks Inc (NRTLQ.PK) and its U.S. long-term disabled employees received preliminary approval from the bankruptcy court that is overseeing the liquidation of the U.S. assets of the failed telecommunications equipment maker.
The Thursday ruling by Judge Kevin Gross of the U.S. Bankruptcy Court in Delaware allows for the settlement to be mailed to the approximately 200 disabled employees and allows them to raise objections at a final hearing on April 30.
Nortel, once the largest telecommunication equipment company in North America, agreed not to terminate any of the existing long-term disability benefits for its former employees on or before May 31, unless the company grants the committee a general unsecured claim of $28 million.
After the settlement is approved, the long-term disabled employees would receive the general unsecured claim, which they would be free to sell.
Nortel would be freed from any further liability.
Several disabled employees have raised initial objections to the settlement for a variety of reasons, including a request for an independent auditor to oversee the disbursement of any funds.
Nortel has sold all of its operations, piling up $9 billion in cash in the process. However, bankruptcy and insolvency proceedings in Canada, the United States and Europe are now preparing for litigation to determine how to split that money.
The bankruptcy case is In re: Nortel Networks Inc et.al, U.S. Bankruptcy Court, District of Delaware, No: 09-10138
(Reporting by Tom Hals in Wilmington, Delaware; editing by Matthew Lewis)