Claims traders are peppering former Nortel Networks Corp. employees with offers to pay 70 cents, 80 cents or more for their bankruptcy claims, the Wall Street Journal reported yesterday. Nortel collapsed in January 2009, leaving many without jobs and without severance pay in a rocky economy. Now Nortel is sitting on some $9 billion in cash and has begun to sift through employee claims, sending out notices that say what the company thinks those claims are worth. Nortel says that the money in its deferred-compensation plan belongs to its creditors. It wanted to settle with deferred compensation claimants, anyway, because they are entitled to file claims as unsecured creditors. Settling would help the former employees cash in at the claims traders, according to Nortel. Not really, said Bernstein Shur Sawyer & Nelson LLP's Robert Keach, who has been hired by about half the deferred-compensation claimants to battle Nortel for the cash. Nortel's deferred-compensation claimants are not unsecured creditors, according to Keach. The money in the deferred-compensation fund belongs to them, not to Nortel, he contends.
