Retirees point out that they are forced to stand in line along with bondholders in order to retrieve the retirement savings and future disability payments Nortel promised before it went bankrupt.
Ottawa (15 September 2009) – A petition has been organized by a former Nortel employee seeking change in Canada’s bankruptcy laws. The petition calls on Parliament:
- to amend the Companies Creditors Arrangement Act (CCAA) and the Bankruptcy and Insolvency Act (BIA) to protect the rights of all Canadian employees, and to ensure that employees laid off by a company, receiving pension or long-term disability benefits during bankruptcy proceedings obtain preferred creditor status over other unsecured creditors; and
- to amend the Investment Canada Act to ensure employee-related claims are paid from proceeds of Canadian asset sales before funds are permitted to leave the country.
The petition, which already as 12,000 signatures, was initiated by Melanie Johannink, a former employee of Nortel. Ms. Johannink is angry that pensioners and employees with long-term disabilities are forced to stand in line along with bondholders in order to retrieve the retirement savings and future disability payments Nortel promised before it went bankrupt.
Nortel is currently being liquidated under CCAA bankruptcy protection and its cash in Canada will be distributed according to priority rules set by the BIA.
Canada's bankruptcy laws for employment-related claims are extremely weak. The Nortel retirees association points out in a statement that “company pensions in the U.S. and U.K. are guaranteed by federal government agencies. “These agencies are aggressively pursuing Nortel’s assets worldwide to recover their financial commitment to the pensioners. While the U.S. and U.K. governments are stepping up to protect their people, Canadian pensioners, long-term disabled and severed employees are increasingly concerned about not getting equal cross-border cash settlement within the courts.”
The retirees want the federal government to protect the benefits of Nortel workers in Canada by setting conditions on the approval of the foreign purchases of Nortel's businesses, including allocation of sale proceeds to the Nortel Canadian pension, health and long-term disability plans, as well as a severance fund so as to ensure net benefit to Canada.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE.