Frequently Asked Questions (FAQs) (Nortel US Retirement Protection Committee)

Transcription

1 Frequently Asked Questions (FAQs) (Nortel US Retirement Protection Committee) The NRPC (US) is providing this information to help answer questions that many former Nortel employees are raising as a result of Nortel filing chapter 11. The answers are by no means to be interpreted as legal guidance, and should be considered purely as informational. As more information becomes available the NRPC (US) will provide updates and corrections as warranted. March 18, 2009 Pensions Who Is The NRPC Representing? Any former Nortel Employee who may have a claim as a result of the Nortel Chapter 11 Bankruptcy. This includes all Ex-Nortel (NT) employees who have an entitlement to benefits such as Qualified Pensions, Non-Qualified Pensions, Deferred Compensation, Severance Payments and also Health Benefits, Life Insurance and Long Term Care Insurance Will my pension payments continue during the Chapter 11 process? Nortel has indicated that for now, pension payments from the Qualified pension plan are being paid out at their full value. We are not certain whether this will continue in the longterm. Deferred Compensation, Severance Payments, Non Qualified Plan and SERP payments are currently not being paid. If I am not yet retired, but no longer working at Nortel, will my pension rights continue? A request to transfer the commuted value of your pension from the Pension Plan may be put on hold, or if allowed, will be reduced until the value of the fund is known. You cannot be stopped from taking your pension depending on age and years of service as per the Pension Plan. This could change based on the outcome of the BK CH 11 proceedings. Is it possible to agree to a reduced pension if that option is proposed? No. Pension law does not permit a reduction of earned benefits. If Nortel declares bankruptcy (Chapter 7) and the underfunded plan is wound-up, all retirees (and all other Plan members) would most likely see a reduction in their pensions. If Nortel is sold to another company, does the purchaser have an obligation towards pensioners? A successor entity would have no legal obligation to pensioners unless it agrees to accept Plan liabilities. Certain Government laws may provide rights to employees and pensioners, or the Government may insist on some protections. We are not certain whether such obligations will be honored. This is one reason why the NRPC believes we need strong legal representation to protect Ex-Nortel employees.

2 Is the Qualified Pension Plan underfunded? What if the market recovers? The Qualified Pension Plan is underfunded but we are not sure to what extent. The nonqualified, SERP, severance & health care payments were all derived from revenue and have no formal funding trust or pool requirements For the time being, your Qualified Pension payments will continue as usual. If Nortel becomes bankrupt (Chapter 7) and the plan is wound-up, the Plan deficiency will become an important aspect of what benefits that will still be available to ex-nortel employees. If the underfunding is a result of lower stock values, is Nortel responsible for this deficiency? The law requires the employer to backstop defined benefit pensions. Nortel has an obligation to see that the funds in the Pension Plan cover the disbursements owed to retirees. For now, Nortel is making required Qualified Pension Plan contributions. If the Pension Plan is wound-up (Chapter 7) and I am offered a commuted value for my pension, will I receive 100% of its value? No. If Nortel declares bankruptcy and the Pension Plan is wound up in a deficit, your pension and other benefits will be determined by the BK Court and the PBGC.(Pension Benefits Guaranty Corporation) Who is responsible for the Pension Fund? Nortel through Mercer ( ) administers the Fund and makes decisions regarding investment policy. Investment decisions are usually delegated to a committee of the Board, often with outside advisors. Mercer is the actuary for Nortel's Pension Fund and Northern Trust the custodian of the assets. If the Plan is wound up, the Court will assign the administration of the Qualified Pension Fund to the PBGC. When does the Pension Benefit Guaranty Corporation (PBGC) come into play? The Court can assign the PBGC at anytime depending on court defined circumstances Again, this is why Ex-Nortel employees need a legal voice in the BK proceedings. Can the Pension Plan be wound-up even if Nortel successfully re-organizes and emerges from BK Ch 11 protection? This is possible depending on the findings and outcome of the BK Ch 11 Court proceedings. In bankruptcy (Chapter 7), will the Nortel Pension Plan be discontinued? Yes and it may take several years. The Qualified Pension fund would be transferred to the PBCG who would then assume responsibility for management of the funds. Could the pensioners take over our Pension Plan and manage it? No.

3 Benefits What is happening to our health benefits? Health Benefits are currently being paid. For now, Nortel continues to make these payments. Should Nortel elect to terminate or change any benefits, the Company would be required to petition the Court at which time the Court would appoint legal representation for the retirees (perhaps not representation of the NRPC choosing). This is just another good reason why the NRPC requires strong legal representation. Do benefits include the Life Insurance Plan? Yes in many cases, If this was part of the benefit package extended to the Ex-Nortel employee when he or she left Nortel. Why have I stopped receiving my Non Qualified, SERP or other supplementary payments? Nortel is no longer making those payments that are funded through its operating assets. We are not yet sure whether you will receive these payments in the future, but any payments you were entitled to will now become a claim in the claims process within BK Ch11 Court if you have filed a Proof of Claim. Is it possible that the government will step in to guarantee our Non-Qualified Pensions, SERP, Health Benefits or other payments if they are discontinued? It is not likely that this will happen. The courts will decide. If Health Benefits are discontinued, will it be possible for us to "step in" to the plan and pay the premiums ourselves? It is not likely that this will happen unless the company emerges from BK 11 protection and agrees to allow you to do so. Is anyone looking for other group plans? This is not currently under consideration. Is there a conversion privilege for Health Care and Life Insurance Benefits without proof of health? We are not sure at this time. It will be necessary to look at the documents to make this determination. Ex-Nortel employees should contact the Dept of Labor within their State for answers to this question as well as COBRA insurance benefits. Will those who receive a Survivor's Pension be included in the group? Yes. Your pensions and other benefits will receive the same treatment as those of other plan members and we encourage you to join and support the NRPC as we need as many people as possible to give us a strong voice in the BK Court. Can deferred pension plan members be part of this group? Yes. Your pensions will receive the same treatment as those of other plan members. Will you represent me if I am currently receiving disability payments and my pension continues to accrue? No. You are technically still an employee of Nortel and therefore we cannot represent you.

4 Chapter 11 Bankruptcy What is the Chapter 11 Bankruptcy? The BK Courts allow companies who are experiencing financial difficulties to file for and obtain court protection from their creditors. This allows the company an opportunity to restructure its business in a process overseen by the Court. What is the usual outcome for companies that undergo a restructuring under the Chapter 11 BK? What will happen to Nortel? Each BK CH 11 restructuring is distinct. The outcome could be that Nortel continues as a smaller entity, is sold in parts or as a whole, or is liquidated in bankruptcy (Chapter 7). There is no one likely or predictable outcome at this time. How long will Nortel's BK Ch 11 process take? This is unknown. Nortel s Council has indicated that the process could take at least eighteen months. Nortel will present their re-structuring plans to the Court sometime in May Who is EPIQ? Nortel has appointed and the courts have accepted EPIQ to collect all data in regards to the US Chapter 11 Bankruptcy proceedings. A complete set of monitor s reports, and many of Nortel public documents are available on the EPIQ web site: Has the NRPC selected a potential Law Firm to represent Ex-Nortel Employees? Yes. Miller and Martin have been selected and we are currently in the process of collecting retainer fees from Ex-Nortel employees. Would the selected Law Firm launch a class action in the Chapter 11 proceedings? No. There is a Court "stay of proceedings" in effect, meaning that a class action (or any other court action outside of the Chapter 11 proceeding) cannot be launched against the company. Miller and Martin has suggested organizing former Nortel retirees in order to create a unified voice and put forward all of their claims. Has the Court granted an order allowing Nortel the option to stop making payments such as Severance, Deferred Comp, Non Qualified Pensions and SERP The Court has granted an order stating that Nortel is not required to make payments towards unsecured creditor claims which include Severance Payments, Deferred Compensation, Non-Qualified Pension Payments and SERP Payments

5 Where in the BK Chapter 11 "pecking order" do unsecured creditors fall? There are very few secured creditors in Nortel's BK proceedings. If Nortel becomes bankrupt (Chapter 7), we will need to negotiate with the Court to determine a payout for unsecured creditors. In the event that Nortel emerges from the BK Ch 11 proceedings, there may be a claims process. Once again, we are seeking representation thorough Legal Council so as to have a significant voice and claim throughout the Court proceedings which would most likely not be achievable on an individual basis. Is there any protection in place to prevent Nortel s current senior management from giving themselves preference? The Court will monitor Nortel and ensure that this does not happen. Can Nortel shift assets? The Court will monitor and control the movement of funds and assets. Protecting Our Pensions What is the most effective way to protect our interests as Nortel pensioners? Join the NRPC and spread the word to as many former Nortel employees as possible. This will promote a unified voice. How do we reach out to all members of the Pension Plan? The NRPC, could at one point through legal representation, petition the Court to obtain a complete list of retirees from Nortel. In the interim, everyone should spread the word!!. NRPC Scope of Activities & selection of Legal Council What s the relationship between NRPC and Miller and Martin? With the help of many Ex-Nortel employees, NRPC would like to retain Miller and Martin as counsel. There is a preliminary agreement that we will proceed on the Authorization and Retainer form. There are no other connections between the parties. What can Miller & Martin do for us? As NRPC legal counsel, they can provide knowledgeable representation to the Court as that is their expertise. They can ensure that the interests of the Ex-Nortel employee group are well represented through the BK Ch 11 process and into bankruptcy (Chapter 7) if that should be the outcome. If there is a Claims Process, they can provide guidance in the necessary Proof of Claim filings. What is Miller & Martin s role in Nortel's Chapter 11 BK Proceedings? Miller and Martin will be seeking a Court Order to represent former Nortel employees who still have an entitlement to Qualified Pensions, Non-Qualified Pensions, Deferred Compensation, and Severance Payments, including entitlements to Health Benefits, Life Insurance and Long Term Care Insurance.

6 What is the success rate of Miller and Martin in past cases? Miller and Martin is a large law firm with three locations in the SE USA. The Firm has 170 attorneys with lawyers who specialize in Bankruptcy proceedings and ERISA issues This is the Law Firm that represented the Delta Pilots in the DP3 case. Miller and Martin s web site can be accessed at: Why should I sign an Authorization & Retainer Form with Miller and Martin? It is important that former Nortel employees be properly represented at the Chapter 11 Bankruptcy proceedings since there will be numerous creditors in line all attempting to protect their own interests ahead of the interests of other creditors. Ex-Nortel (NT) employees who have an entitlement to benefits such as Qualified Pensions, Non- Qualified Pensions, Deferred Compensation, Severance Payments and Health Benefits, Life Insurance and Long Term Care Insurance should preferably, all be represented as one strong voice at the court proceedings. In addition, ex-nortel employees may require legal advice on such matters as how to file a claim as a creditor. This would be difficult to do on an individual basis. Legal advice may also be required in dealing with the PBGC as has been denoted in other Bankruptcy proceedings. The NRPC is attempting to retain the law firm (Miller and Martin) to represent all ex- Nortel employees. In order to achieve these goals, the NRPC must obtain signed retainer forms and $250 checks from 1000 former employees. Miller and Martin will cash your check and deposit it into a Trust Fund where it will be held in trust until such time as it will be used to cover various legal and operational costs. Dispensing of funds, will not be made until authorized by the NRPC upon justification by Miller and Martin.. Miller and Martin intend to make a request to the bankruptcy court to have Nortel pay for a large part of the legal fees. Any funds not used, will be refunded by Miller and Martin. What happens if the Miller and Martin do not receive $250K in retainer fees from the NRPC group? NRPC would not have a law firm. Since the checks are In Trust, legal fees to date would have to be negotiated and justified. Is the $250K just for Filing Fees? The $ sent in by each ex-nortel employee, is to build a retainer fee required by Miller and Martin in order to represent the NRPC and to allow the Law Firm to begin representing ex-nortel employees in front of the Court. What are the potential extra costs that Miller and Martin may want out of an eventual Settlement? The law firm will be paid on an hourly basis.

7 If I cannot pay the retainer fee, does this mean I will not be represented? Only those registered with NRPC, will be considered by the Court as part of an organized group. Will left over money be returned? Yes, any money left over will be returned Is the $ in addition to, or instead of the sign up fee for the NNRA? The $ is the only amount requested at this time. Ex Nortel employees or retirees do not have to become an NNRA member ($25.00 fee) to register for support from the US Nortel Retirees Protection Committee. The NNRA has kindly consented for the NRPC to use their web site to assist in getting the word out. If I register with NRPC by sending the retainer form and check to Miller and Martin, do I have to register with EPIQ as well? Eventually everyone who has a claim against Nortel will have to file with EPIQ systems. As of March 6 th, 2009, there is no deadline for filing the claim. We are awaiting legal advice on how best to complete the claims so that there is a well understood approach that is applied in a common manner to the various categories of claim. The law firm, once secured by retainer, has resources to provide guidance to us on how best to complete our individual claims so that they meet common guidelines. Was the NRPC represented at the Feb 19 th Meeting? Yes and we are now seeking a seat at the creditors table and also at the 1114 committee for all benefits including Health Care. Do I need to be part of this group if my retirement is protected by the PBCG? Yes, You should sign up if you are concerned about benefits such as medical care and other benefits. I am a current employee of Nortel and expect to be laid off soon. Can I join NRPC? NRPC cannot represent current employees. As soon as you are laid off you may sign up. Would SERP be included in Miller and Martin s representation for the NRPC? Yes, check the box Other on the retainer form and write in SERP. If you were receiving both a Non Qualified pension check and a SERP check, then the Non-Qualified box should be checked on the form in addition to the SERP box.

8 If I sign an Authorization & Retainer Form and pay the fee, will I be subjecting myself to any further monetary obligation?. There is no further monetary obligation and you may choose to leave the group at any time. The $ will be held in a Trust Account by Miller and Martin and not dispensed until authorized by the NRPC upon justification by Miller and Martin To whom do I make out the check? The check should be made out to Miller and Martin PLLC, IN TRUST.