Pensioners of Nortels UK arm have won a share of $7.3bn (£4.6bn) assets following a US and Canadian ruling, says PwC.
At the end of an unprecedented joint trial held by video-link, the Delaware Bankruptcy Court in the US and the Supreme Court of Ontario in Canada decided to allocate the insolvent firm's $7.3bn residual assets to pension creditors, including 33,000 UK pensioners who were left with a £2.1bn deficit.
Nortel Networks was a telecommunications firm that went bankrupt in 2009. Its European, US and Canadian entities made simultaneous insolvency filings in London, Delaware and Toronto.
The courts adopted the argument made by the trustee of Nortel's UK pension plan and the Pension Protection Fund (PPF) that the assets of global Nortel group should be divided on a pro rata basis based on creditor claims.
PwC, adviser to the Nortel UK pension scheme, said the result "could set a precedent for future international insolvencies" where the rights to assets are unclear.
Hogan Lovells, who represented the trustee of Nortel UK pension scheme and the PPF, said this was the first insolvency case in which assets had been distributed cross-border following a cross-border trial, and it "makes legal history".
Jonathon Land, PwC pensions partner and adviser to Nortel's trustees, said: "This is a fair decision for pensioners around the world. All too often the rights of pensioners, who have worked hard for a company all their lives, are given a lower priority than other corporate claimants. This decision sees pensioners treated fairly.
"We concluded that a pro rata allocation approach was the most appropriate in the circumstances. Despite opposition from the bondholders who were looking to receive interest on their original claim, we are pleased to see that the judges in both Canada and the US ruled that our approach to allocation was the most appropriate."
John Tillman, Hogan Lovells' lead insolvency partner on the case, said: "We are delighted with the judges' support for the pro rata approach which the UK pension claimants have argued for in these proceedings. Our objective throughout has been to try to ensure that the 33,000 remaining members of the UK pension scheme receive a fair share of the proceeds which are to be distributed from the worldwide insolvency process."
