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Court rejects $57-million deal to pay benefits to former and disabled employees until the end of 2010 in exchange for an agreement not to sue Nortel
Toronto 929 March 2010) – The Ontario Superior Court overseeing the restructuring of Nortel has rejected an agreement the company reached with its pensioners and employees on long-term disability.
The deal included $57-million to pay benefits to Nortel's pensioners and disabled employees until the end of the year in exchange for an agreement not to sue the company over the management and funding of its pension plan and health and welfare benefits.
Funding of the benefits by Nortel, which has been selling off its divisions since filing for creditor protection at the beginning of last year, was set to expire on March 31.
The agreement was opposed by a group of Nortel employees with long-term disabilities.
“From our perspective, we are pleased that the deal did not get approved because of the extreme prejudice that would have resulted to our clients,” stated Joel Rochon, the group's lawyer.
“I remain optimistic that all stakeholders can come together to negotiate an agreement that adequately protects the legitimate interests of the disabled employees without disrupting the bankruptcy process and materially affecting the other creditor groups.”
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