Over the weekend, the pension regulator in the United Kingdom filed a $3 billion claim against Nortel on behalf of the company’s nearly 43,000 retired workers in that region. Now, as in the United States, the government in the U.K. guarantees the benefits. But, as it turns out, the U.K. pension coffers are underfunded. So, officials say, they need to get hold of some of the money from Nortel’s auctions.
The Globe and Mail newspaper in Toronto said it’s unclear whether the U.K. claim holds legal water. And Nortel intends to fight the claim, the paper reported.
“Any claims the U.K. Pensions Regulator has should be addressed through the court-approved claims process,” Nortel told the Globe and Mail.
Nortel pensioners already face pushback from major Nortel creditors in the United States that say they need the money, especially if Canada changes its insolvency laws. The creditors include Bank of New York Mellon, which it says is owed about $4 billion; Flextronics, the company that manufacturers most of Nortel’s equipment; and the Pension Benefit Guarantee Corp., which represents about 30,000 Nortel pensioners in the United States.
The fear is that if Nortel pensioners in line for the $57 million force Canada’s feds to change insolvency laws, the money that would have gone to the creditors would instead go to the former employees. And right now, Nortel’s assets – and the money reaped from sales of those assets – only promises to cover between 50 and 70 percent of claims.
Speaking of assets, Nortel is preparing to liquidate its VoIP unit later this week. All bids are due tomorrow – Texas-based GENBAND is the initial bidder with its $282 million offer for the property.