Bloomberg News

Nortel Judge Approves Committee to Negotiate for Retirees

June 21, 2011

(Updates with second committee in first paragraph.)

June 21 (Bloomberg) -- Nortel Networks Corp.’s retirees and disabled workers are entitled to their own committees and legal advisers paid by the bankrupt telecommunications company to help them negotiate changes to their benefits, a judge said.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, appointed two committees today, one to represent 3,300 U.S. retirees and their families and another for 245 disabled workers.

“It has been somewhat difficult to get the retirees organized,” Gross said during the hearing.

Nortel, once the biggest manufacturer of telecommunications equipment in North America, has proposed canceling some benefits for retirees and for long-term disabled workers, saying it can’t afford them as the company is preparing to shut down.

After Toronto-based Nortel filed for bankruptcy in 2009, it began selling its businesses, raising about $3 billion so far in auctions. The last major asset left, a portfolio of 6,000 technology patents, will be auctioned off later this month with an opening bid of at least $900 million made by Google Inc.

The company requested the retiree committee in order to help it negotiate the possible cancellation of some retirement benefits, company attorney Jane Kim told Gross.

The cost to provide benefits to retirees and disabled workers is about $1 million a month for each group, Nortel said in court papers.

Nortel’s businesses “are in the process of winding down,” Kim said in court today. “We cannot continue to support payment of benefits as they are.”

The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--Editors: Stephen Farr, Fred Strasser

To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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