After a six-year legal battle that stretched halfway round the world, 33,000 British pensioners have won their fight for a fair share of a $7bn (£4bn) fund which represents the remains of former global telecoms giant Nortel Networks.
Fifteen years ago Nortel’s market capitalisation accounted for about one-third of the entire value of the Toronto Stock Exchange. Its history stretched back to the 19th century with links to telephone inventor Alexander Graham Bell.
Yet it become one of the most spectacular casualties of the 2000 dotcom crash and, after a failed restructuring, eventually went bust in January 2009 leaving 53,000 ex-employees with a huge deficit in their pension scheme, the majority of them British pensioners.
Its European, US and Canadian entities made separate insolvency filings in London, Delaware and Toronto creating cross-border problems for creditors. At stake was the $7.3bn residual Nortel assets sitting in an escrow account in New York.
But a landmark ruling on Tuesday by a US and Canadian court that the proceeds should be shared among the insolvent entities on a pro-rata basis, means all 33,000 UK creditors should now receive up to two-thirds of their claims.
It is believed to be the first insolvency case in which assets have been distributed cross-border according to the claims of creditors following a cross-border trial.
Angela Dimsdale Gill, of Hogan Lovells, the lawyers representing the UK pensioners, said: “This bold decision does justice to the people who created the wealth of Nortel and who were promised an income in retirement.”Reuse content