Nortel NetworksNATHAN DENETTE
Lawyers for Nortel Networks Corp. were in a Toronto court Thursday morning trying to fend off a $3.4-billion claim by the British pensions regulator.
The U.K. Pensions Regulator has moved in on Nortel's CCAA proceedings, attempting to pull the company into a separate legal battle in Britain that might give U.K. pensioners a greater stake in the cash generated by auctioned Nortel assets.
Fred Myers, a lawyer for Goodmans LLP acting on behalf of Nortel's court-appointed monitor, said the regulator was "hijacking the process" in an attempt to get a "leg up" in the continuing Nortel restructuring.
This, he argued before the Superior Court of Justice's commercial division, would benefit Nortel's U.K. pensioners but come "at the expense of Canadian pensioners."
In Britain, there are estimated to be more than 43,000 Nortel pensioners. One British pensions expert told The Globe and Mail that, having incurred an immense shortfall, the regulator was moving overseas to attempt to ensure it had the necessary funds to cover the payouts after Nortel's collapse.
Nortel's lawyers are arguing that the regulator's claims, which were already filed as part of the CCAA process, should be dealt with within the process. By going outside of the process, the lawyers say the regulator has violated the stay, which allows Nortel to avoid the immense costs of litigating various claims or lawsuits brought against the company during its insolvency.
"We can, and do, deal with foreign claims in our claims processes," Mr. Myers told the court.
Mr. Myers said the CCAA process would eventually deal with the regulator's claims, but that by going outside off the process, the agency was distracting the company and could be a drain on Nortel's coffers.
"They crossed the line when they came here," he said, referring to the regulator's decision to file a separate claim with an Ontario court.
John Marshall, a partner with Borden Ladner Gervais LLP acting on behalf of the regulator, responded in an afternoon session. He said calling this a hijacking was "grossly overstated" and that the British agency was simply doing its job, being empowered to do so by Britain's parliament.
"The regulator never becomes a creditor," Mr. Marshall told the court. "Its job is to fulfill its statutory obligations."
Mr. Marshall argued that if this court allowed Nortel to avoid participating in the British hearing, that it would be tantamount to trampling the regulator's authority.