U.S.-Canada insolvency ruling gives fair pay-out for pensioners

Published at 17:21 PM on 13 May 2015

Judges in the US and Canada deciding on the allocation of $7.3bn of residual Nortel assets yesterday issued a ruling in favour of pension creditors, including 33,000 UK pensioners who were left with a £2.1bn deficit when the company entered insolvency in 2009.

The judgements allow pensioners of the Nortel UK Pension Scheme to share in a greater proportion of the holdings than had originally been proposed by the US and Canadian insolvent estates. The result could set a precedent for future international insolvencies involving highly integrated multinational corporates where the rights to assets are unclear.

The Nortel estates, their creditors and advisers have been working through the complexities of a highly integrated group since it entered insolvency in 2009. This has culminated in litigation to work through competing claims across the Nortel estates and allocation of the $7.3bn. PwC has been acting as the financial adviser to the Nortel UK Pension Scheme since 2009.

Jonathon Land, PwC pensions partner and adviser to Nortel’s trustees, said:

"This is a fair decision for pensioners around the world. All too often the rights of pensioners, who have worked hard for a company all their lives, are given a lower priority than other corporate claimants. This decision sees pensioners treated fairly.

"We concluded that a pro rata allocation approach was the most appropriate in the circumstances. Despite opposition from the bondholders who were looking to receive interest on their original claim, we are pleased to see that the judges in both Canada and the US ruled that our approach to allocation was the most appropriate."


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