After a six year legal battle that stretched halfway round the world, 33,000 British pensioners have finally won their battle to a fair share of a $7bn fund which represent the remains of former global telecoms giant Nortel Networks.
15 years ago Nortel’s market capitalisation was so large it 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 some 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 US$7.3bn residual Nortel assets left sitting in an escrow account in New York.
But a landmark ruling on Tuesday by the Bankruptcy Court for the District of Delaware and Ontario's Superior Court of Justice 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 around two-thirds of their claim.
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, head of pensions litigation at 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 for their commitment to the company in its heyday.
“This is a victory by UK Pensioners for Nortel pensioners on both sides of the Atlantic. They were the only party running the successful argument as their primary case. Today they can welcome this decision for fairness and common sense, along with Nortel pensioners in Canada.”Reuse content