Nortel’s Long-Term Disabled Former Employees Continues Fighting for Additional Compensation after Bankruptcy

by San Antonio Attorney

In 2001, Greg McAvoy was done in when he began his disability leave from Nortel due to his aggravating multiple sclerosis.  But right now, after the company went bankrupt, he is scraping by without compensation at a Calgary care facility and continues fighting for what he believes is his rightful share of what’s remain of the collapsed company.

McAvoy, who is 62 years old, is one of the 40 sick or disabled former Nortel employees who claim they have been treated unfairly as creditors, pensioners, bondholders, and their legal representatives scraped of what’s left of the formerly giant tech company.  They oppose to the decision this fall to distribute the US$7.3 billion that’s left of the company, arguing that it is abhorrently unfair to past employees who were on disability leave when the company declared bankruptcy in 2009.

The company is attempting to pressure the Minister of Innovation to modify Canada’s bankruptcy laws to grant disabled employees preferred status in the event the assets of a defunct company are distributed among its creditors.

McAvoy said receiving almost nothing is really tragic.  He’s been having a hard time to get by since Nortel stopped providing benefits 6 years ago.

Mark Zigler, the lawyer representing the firm fighting for pensioners and disabled employees, workers on disability leave from Nortel — about 360 employees, as stated in court documents — were expected to receive two-thirds of their wage annually until they reach 65.  But the tech company filed for bankruptcy and those payments stopped at the end of 2010.

Their initial part of the bankruptcy money was authorized in 2010 in accordance to a settlement in line with the Health and Welfare Trust, which is an account set up by the company for the payment of workers’ benefits like life insurance and disability payments.  However, due to a $37-million deficit in the trust, the beneficiaries only received 38% of the amount they would have been provided until they reach 65 years old had Nortel remained in business, said Zigler and Diane Urquhart, a financial expert.

Following the latest “lockbox” resolution, which is expected to be confirmed in January 2017, Zigler said the another payment will be provided to disabled former employees that will add their total pull up to about 70% of what they would have gotten eventually, had the company continued to exist.

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