Wednesday, February 19, 2014

Nortel's Long March to Dissolution

As a former nortel employee and minor creditor due to a pension claim, I check on the bankruptcy process regularly.  After over 5 years, nortel may finally be granted it's wish and be dissolved by the end of 2014.

Once it became clear that there was a lot of money at stake, there was an explosion in claims from governments that had to make up the shortfalls in nortel's many defined benefit pension plans around the world.  These large claims were contested by other creditors and the process of dissolution was reduced to a crawl.  The many many lawyers have profited from the long court case, but the people awaiting severance, disability claims, and pensions have received almost nothing.

Let's hope no other multinational with defined benefit pension plans ever attempts a bankruptcy to dissolve the company.  Chapter 11 (reorganization) is possible as demonstrated by GM, but winding up a large multinational with pension liabilities is definitely difficult .


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