Jan 22 Nortel Networks Inc, which filed for
bankruptcy in 2009, has reached a settlement with a committee
representing its long-term disabled employees over a plan to end
disability benefits, according to court documents.
Nortel, once the largest telecommunication equipment company
in North America, said it will not 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.
If the company were to grant the committee an unsecured
claim, the proceeds of the claim, minus the administrative
costs, would be allocated among the disabled employees and would
free Nortel from any further liability.
The company has asked only for an initial approval of the
settlement agreement with an opportunity for the employees to
object to the settlement, according to documents filed on
Friday. The initial hearing regarding the approval is expected
to take place on Feb. 14.
A hearing over a plan to end long-term disability benefits
for the company's former U.S. employees had been postponed
earlier this month. The proposal to end those benefits has been
cast as a life-and-death battle against bondholders.
Nortel once dominated the Toronto Stock Exchange as a $250
billion telecoms company that spanned the globe. It struggled
after the 1990s tech bubble burst and, dogged by accounting
problems, filed for bankruptcy in January 2009.
The company has sold all of its operations, piling up $9
billion in cash in the process. However, it was never settled
how to divide that money among the bankruptcy and insolvency
proceedings in Canada, the United States and Europe.
Mediated talks aimed at dividing Nortel's cash are scheduled
to end on Tuesday. The negotiations have pitted bondholders
The bankruptcy case is In re: Nortel Networks Inc et.al,
U.S. Bankruptcy Court, District of Delaware, No: 09-10138.