Nortel pensioners reach new deal

Health, pension and long-term disability benefits for former Nortel Networks employees won't be cut off on Wednesday if a new deal with Nortel gets court approval.

The new agreement would preserve benefits until the end of 2010, like an earlier agreement rejected by the Ontario Superior Court of Justicein Toronto last Friday, the law firm acting as court-appointed counsel to about 20,000 former Nortel employees confirmed.

The revised dealis scheduled to goto court for approval Wednesday morning.

Judge Geoffrey Moratwetz of the Ontario Superior Court of Justice ruled that the previous agreement was unfair to other creditors such as bondholders and created uncertainty for them due to a specific clause that has been removed in the new agreement.

The clause would have allowed former employees to take advantage of future changes to federal bankruptcy laws to increase their benefits.

"The new agreement is exactly the same as before, except that it takes that clause out," said Susan Philpott, a lawyer at Koskie Minsky, the Toronto law firm that represents the Nortel employees.

Nortel and Koskie Minsky were both involved in negotiatingboth deals, along with several other representatives for the former employees andcourt-appointed monitor Ernst and Young, which is supposed to look out for all creditors' interests in an impartial manner.

Nortelwasa successful technology giant with 90,000 employees around the world at the beginning of 2001. The companybegan tofalter badlyaround that time and filed for bankruptcy protection in January 2009.

Since then, most of the company has been sold off as it prepares to wind down operations.

The company announced it on Feb. 8, 2010, that it had reached a deal with its pensioners and its employees on disability leave, who feared they would lose their benefits when the company is finally dissolved. The deal failed to wincourt approval last Friday.