Battles over dead Nortel highlight faulty laws, CAW says

TORONTO • The complex legal battle over $9 billion in residual assets of former technology giant Nortel Networks underlines the inadequacy of Canada’s bankruptcy laws, says the head of the Canadian Auto Workers.

Union president Ken Lewenza says Ottawa needs to intervene to ensure that former workers, disabled employees and pensioners at the now-defunct equipment maker can get their fair share of the assets, which are being claimed by more than 100 parties including bondholders, trade creditors and governments.

“It’s a case that the government should look at and implement legislative changes to make sure that these things never happen again,” Lewenza said Friday.

Efforts to divide up Nortel’s creditor claims ended abruptly Thursday when Ontario Chief Justice Warren Winkler, who was court-appointed to lead the proceedings, concluded that there was no sign of a resolution in sight.

“The chief justice has concluded that further efforts at mediation are no longer worthwhile,” according to a spokesman for the talks.

By this point, the mediation, which was only supposed to last a week, had already been extended twice by Winkler. This was the third attempt at a resolution.

Lewenza blames the deadlock on a group of Nortel bondholders who want the full value of their bonds, plus interest, which amounts to $4.5 billion, even though he says they only paid 20 cents on the dollar for them.

He says there has been little room for negotiation, especially for his members, some of whom have lost their pensions and life savings when the Ottawa-based firm went belly up. CAW represents about 850 pensioners and former disability workers.