33,000 UK pensioners to receive share of $7bn Nortel assets

Thirty three thousand UK pensioners are to receive their share of the long-awaited US$7bn of Nortel’s residual assets following a decision by Nortel’s global insolvency.

The decision will come as welcome news to the pensioners who were left with a significant deficit in their pension scheme when the telecoms firm collapsed in 2009.

The final agreement as to how the assets will be allocated is subject to US and Canadian creditor approval and a court sanction in these countries and various other authorities, including those in the UK.

In May 2015, judges in the US and Canada issued a ground-breaking decision to allocate the residual assets on a pro-rata basis, as encouraged by the Nortel UK pension scheme. The Canadian court refused leave to appeal the distribution decision. While an appeal process had begun in the US, discussions continued, resulting in a final agreement.

The exact amount that will be returned to pensioners has not yet been confirmed due to ongoing non-litigation activity in Canada and Europe.

Commenting on the announcement, the trustee of the UK Nortel pension scheme said it is very pleased that a settlement of the long and bitter dispute over Nortel's residual assets is finally within sight.

“The deal announced last night is the culmination of over a year's discussions and an eventual compromise of all parties' positions in order to reach the goal of delivering funds to creditors. It will be welcome news to creditors across the Nortel globe as well as to the Courts, who have taken every opportunity to urge the parties to find common ground.”

Hogan Lovells head of pensions litigation Angela Dimsdale Gill said: "This is an enormous step on the road to conclusion. It is very much hoped that the distribution of funds to all creditors everywhere is now genuinely within sight. The former employees of Nortel, in whatever country, who created its wealth, many of whom are elderly and vulnerable, have waited a long time for the end of this battle.

“The current consensus is the fruit of ceaseless efforts by the parties across many months since the trial judgments came out last year. The Trustee is very pleased that through hard work, good faith and determination, it has been possible to reach a compromise of this long-running dispute. It is grateful to everyone who has played a part in getting this far."

PwC served as the financial adviser to the Nortel UK pension scheme throughout the process.

PwC head of pensions credit advisory practice and adviser to Nortel’s trustees Jonathon Land, said: "An agreement is very welcome, and brings nearer the day when distributions might be made to creditors, including the trustee of Nortel's UK pension scheme.

“The trustee directors have acted with great professional integrity seeking to achieve the best possible deal for their members.

“This case will impact how pension scheme creditors are treated for years to come. Groups increasingly operate across geographical and legal boundaries and pension scheme creditors must ensure that they really understand where their legal support comes from."

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