In a request for political action “Immediate actions to improve your outcome in the Nortel Insolvency” the NRPC is calling on all retirees and former employees who have Canadian claims to contact Minister of Industry Paradis, their senior regional MP and their own local MP to request immediate legislative changes to “block the vulture bond funds from getting above 100% of the face value of their bonds by claiming interest on those bonds. If the vulture bond funds were successful in claiming interest they could get as high as 125% of the value of the bonds while the Canadian former employees will get cents on the dollar for their various claims such as pension plan underfunding, lost severance, lost long-term disability support, lost medical and dental insurance etc.”
You might ask how such an outrage might occur given that we are living in a civilized country which supposedly has some minimal level of protections of employees’ already earned pensions and other retirement benefits? Well the answer is: No Such Luck! Not only do pensioners get no priority over other unsecured creditors in case of bankruptcy of their employers who leave a significantly underfunded pension ‘trust’ fund, but believe it or not, we seem to be heading toward an outcome where Canadian pensioners might get paid perhaps $0.15/dollar of pension shortfall while bond-holders might get $1.25/dollar of face value. We are poised to get such an unbelievable outcome as a result of some potential combination of: (1) multi-jurisdictional nature of this bankruptcy where US assets-to-claims ration might be higher than in Canada, (2) vulture fund bond-holders insisting that unpaid bond interest be part of claims, (3) some bond-holders wanting to double dip by not just claiming in the US, also against the Canadian estate, and (4) many other foreign creditors trying to make claims against the Canadian estate.
Write to the Federal politicians who are supposed to represent your interests to try to energize them to action to prevent this injustice.