TORONTO – Nortel pensioners gathered at a Toronto courtroom on Monday to watch lawyers battle over billions of dollars in asset sales from the former technology giant — a fight that will determine their financial futures and is expected to set a precedent for global bankruptcy cases.
With their eyes locked on a giant projection screen, more than 25 pensioners sat in an overflow room watching the first day of the cross-border bankruptcy trial unfold through a high-tech video feed.
The showdown, playing out in Toronto and Wilmington, Del. courts, is aimed at determining how $7.3 billion of remaining Nortel assets will be divided between former employees, pensioners, creditors and bondholders.
Judges in both cities are conducting the proceedings simultaneously via a secure multi-camera video link.
Lawyer Brian O’Connor, who represents UK Nortel pension plan members, described Nortel as a company that has been torn to apart as various debtors “fight like jackals over the carcass.”
“The bickering and squabbling has to come to an end,” he told the judges.
At its height from 1999 to 2000, Nortel was worth nearly $300 billion, employed more than 90,000 people globally and was regarded as one Canada’s most valuable tech companies.
In 2009, the company filed for bankruptcy in North America and Europe, shedding thousands of jobs. The company was felled by changing market conditions, economic upheaval and an accounting scandal that devastated its stock price.
Already, the costs of Nortel’s demise have climbed above US$1 billion over the past five years, with legal expenses eating away at money that could be divided among the various parties.
On Monday, Nortel’s former employees were easily outnumbered by lawyers — about 50 legal staff were in the Toronto court and another group was in Delaware — fighting over the remains of a company once hailed as Canada’s technology darling.
The tug of war began with a focus on the impact overseas, with lawyers representing Nortel’s European operations, who told the judges that their division deserves a piece of the money generated from $4.5 billion in patent sales, even though the assets were legally owned by the parent company.
Later, Sheila Block, a lawyer for Nortel’s U.S. operations, told the judge the division was “not some weak sibling or child” but a key part of Nortel’s business that was part of the “financial backbone” of the company.
Ontario pensioners gathered outside the court during the lunch break to rally for their share of the remaining Nortel money, wearing t-shirts that read: “Bondholders profit! Nortel Pensioners suffer!”
“Other people are trying to profit by this. All we want is what we were promised,” said William Galloway, a 30-year Nortel employee who worked in various jobs for Nortel, including as a database administrator for the carrier division.
Galloway was laid off when Nortel folded in 2009, and said his life and future he planned was changed dramatically, sidelining his dreams of vacationing in Florida during retirement and raising the possibility he may have to put his home up for sale.
“When I was locked out I was not given severance. One day, that’s it, you’re done,” the 63-year-old man said outside the courthouse.
“Everybody knows that when they go on pension ultimately you’re going to have to live a somewhat reduced lifestyle. This is way more reduced than we had planned.”
Former employee Michael Moorcroft said he was at the court to support his fellow pensioners and represent some who were unable to attend because they had either moved away for new jobs or were ashamed of their financial state.
“People have a great deal of pride,” the 69-year-old Mississauga, Ont. resident said.
“They don’t like to talk about the fact they’ve had to do these things to survive.”
The Nortel trial is considered one of the biggest bankruptcy cases in Canadian history and could serve as a reference point for future bankruptcy cases that concern international companies.
Filings with the courts say about 16,000 documents will be presented as exhibits over the coming weeks — whittled down from an initial three million — and 110 witness depositions have been taken leading up to the trial.
The main trial is scheduled to continue until the end of June.