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Angry Nortel retirees want legal representation in bankruptcy case

Posted March 5, 2009

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— Retirees from Nortel are fed up with what’s happening at the troubled telecommunications equipment-maker, and they want a law firm to represent their interests during bankruptcy proceedings.

Concerned about the impact of Nortel’s financial woes on their retirement benefits, the Nortel Networks Retirees Association (NNRA) is asking 1,000 of its members to pay $250 each as a $250,000 retainer for Miller & Martin, a firm with offices in Atlanta and in Nashville and Chattanooga, Tenn. The recently established Nortel Retirees Protection Committee is leading the effort.

Jerry Aiken, a Triangle resident and a 27-year Nortel veteran who retired in 2003, said the group was alarmed by the company’s termination of severance benefits to recently laid-off workers. Courts in the U.S. and Canada, where Nortel is based, permitted Nortel to stop severance pay and benefits after the company filed for bankruptcy in January.

“The simple answer is, 'Yes, anyone would be upset with what is happening,'” Aiken told WRAL.com and Local Tech Wire when asked if he was angry.

“The impact potentially ranges from losing health care, some or all of your retirement, and if you are recently laid off, any severance to help with a transition to new employment,” he added.

In its appeal for support, the protection committee declared: “Having a large number of participants focused on the court proceedings through a single committee such as the NRPC along with a single legal counsel will have a powerful impact and will increase our chances of being treated properly during the legal negotiations that take place. ...”

The retirees and former workers are seeking to protect qualified pension, non-qualified pension, deferred compensation, former employee severance, health care, long-term care, life insurance and other benefits.

“There are many retirees and recently severed employees that are impacted by the Nortel bankruptcy filing,” Aiken said. “Getting the word out is our biggest challenge. When former employees review the plan, I believe we will get sufficient support to retain counsel.”

Nortel still employs some 2,000 people in the Triangle and some 30,000 worldwide. However, a 10 percent work force reduction is part of Nortel’s current restructuring plans. Some of the laid-off workers losing severance benefits live in the RTP area.

To spread the word about their efforts, the NNRA is using its Web site, where it has posted information about the retainer and other bankruptcy updates.

Aiken , who said he is speaking only for himself and not other Nortel employees or the NNRA, is perplexed by what company management is doing as part of the bankruptcy reorganization.

For example, Nortel is asking the courts for permission to pay selected managers and employees up to $45 million in retention bonuses while laying off other workers and terminating severance.

“[W]hat is more concerning is the current request by Nortel senior management for the court to approve millions of dollars as retention bonuses for senior management and other selected remaining employees,” Aiken said. “This leadership team is a major factor for the mess that NT is in, and now they want retention bonuses to ensure key players don’t leave?

“They are out of their mind,” he added. “[A]ll would probably have been better off if most left long ago, and secondarily, in this economic climate, who is looking to hire [telecommunications] resources that just took their company into bankruptcy? Hopefully, the courts will not approve this request!”

Aiken, who worked in a variety of roles for Nortel around the U.S., said he and other retirees are “saddened” by what they see happening at the company.

“Nortel has been a great company for many years,” he explained. “[I]t saddens myself and most all former and current employees for the company to be in this condition.

“Employees are the main ingredient that made Nortel successful over the years, and it is troubling to now see ex-employees/retirees impacted financially. The impact varies for the many former employees, negatives ranging from recently laid off employees not receiving severance pay, deferred compensation (money contributed by employees from their normal paycheck) being stopped, non-qualified pension checks have stopped, and many questions still exist regarding medical benefits, life insurance and qualified pension payouts.”

While Nortel may be within its legal rights to take these steps, Aiken said, people are suffering as a result.

“Companies always reserve the right to make changes to ... compensation, benefit, and retirement policies,” he acknowledged. “However, when decisions are made based on a set of expectations and in some cases a signed contract that are suddenly not fulfilled by one party, people’s lives are impacted!”

The NNRA believes that retaining legal counsel will give them a voice as the bankruptcy courts determines how Nortel’s debts and obligations should be resolved.

“The objective is to obtain recognition by the court so as to have a seat at the table for the proceedings,” he said. “The larger the number of employees that are being represented, the better the chances to receive court recognition so as to have some voice in the proceedings.”

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  • IdoNOTliveinDurham Mar 6, 2009

    UNC1997 and ironfist go here and select the drop down to show 100 and then click on amount of claim to show the number. 250.00 for and individual or 250K for a group claim is a drop in the bucket. http://chapter11.epiqsystems.com/NNI/claim/search.aspx
    You can also see who the largest one out is IRS........

  • james27613 Mar 5, 2009

    The BOD ignored the future and that is why Nortel is in the sad shape it is in. Looking at the older annual reports, all old men on the BOD, no clue to the future, only their own interests.

  • james27613 Mar 5, 2009

    More of the same, the Company tells the workers too bad, sorry, we goofed up big time but we're getting mega bucks to stay on and make things worse while we cut you off!

    Just like Midway Airlines did in RTP, they filed BK on Saturday, that made all the paychecks bounce and any vacation pay gone.

    Oh, Management got their own special pension plan, before
    they filed for BK because they are key people and need to run,
    er RUIN the company.

  • chfdcpt Mar 5, 2009

    Ever wonder why the CEO's etc get the big bonuses for driving the company into the ground?

    By doing this, it makes the value of the stock drop like the proverbial lead balloon. This leads to folks selling their stocks to keep some of their money. Of course, where do these stocks go? Back to the company. Once the company buys back most of the outstanding stock, then they will have a financial turn around and become a profitable company. That means that the price of the stock will start to rise. And since the company will own most of the stock, that makes it worth more millions in stock.

  • Wheelman Mar 5, 2009

    Contrary to what most people think, contracts have little real standing in a bankruptcy proceeding. The laws for bankruptcy court allows the judge to break, set aside or modify any contracts as they determine to be necessary for the process. This is a chapter 11 filing which is designed to allow the judge to set aside debts, order assets sold and pretty much do what they think is necessary for the company to emerge as a viable entity at the end. As ususal, in the end, the only real winners are the lawyers. Not that I don't have any sympathy for those who have lost severance pay etc., but it's a really sad situation for the retirees since they put in all those years and may not be able to go back to work if they lose their retirement.

  • Phenylalanine Mar 5, 2009

    I was one of the thousands that no longer works there, but fortuately when I was laid off I took every dime from my 401(k) and pension with me. I suggest that the newly laid off workers do the same thing because otherwise they will have no money left. As far as the legal firm I cannot see them getting around the bankruptcy laws to get additional compensation.

    I expect that the current management will have some explaining to do about how they have treated the many thousands of workers while paying bonuses to the "leadership" that got them into this mess. Hopefully, other companies will realize what poor management they are and not reward their bad behavior with new lucrative positions. I guarantee that the workers still there can run the business much better than the guys at the helm heading toward the rocks.

  • iron fist Mar 5, 2009

    $250,000 retainer? The retirees and layoff employees need help but this may only help the lawyers.

  • Seeminglyopposed Mar 5, 2009

    I am tensionly awaiting for someone to "SNAP" and all these senior managers of these large companies that are being paid to stay and make a mess, not being able to walk around without body guards. This is going to soon boil over, people are getting really fed up with this entire situation.

  • unc1997 Mar 5, 2009

    Me-N-NC...Any money that the employee would see will be years from now and pennies on the dollar. Look at WorldCom, some of their employees just received their settlements for their final checks and most were less than $100 for 2 week of work. The law firm is looking for 1000 people to put up $250 with no promises other than $250K for the lawyers. They are playing on the employees sense of helplessness, by paying the $250 they at least feel like they are doing something. It's a sad situation for the employees and I bet they are in chapter 7 by the end of the summer

  • whocares Mar 5, 2009

    It doesn't seem like big business has gotten the message. Take the millions they are going to give the greedy and give it to the people who made the money in the first place, the EMPLOYEES. I am tired of executives living off the employees with no regard for them.

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