Nortel Networks Corporation – 49
December 3, 2011
Cheques for Partial Payment of Pensioner Life Insurance Claims are Being Mailed
The Court on November 8, 2011 approved an interim distribution from the Nortel Health and Welfare Trust (HWT) on account of Pensioner Life. The first instalment from the assets of the HWT is now being mailed by E&Y as a cheque. The bulk of the cheques have now been mailed, but some 600 are awaiting clearance and may take until December 16 to process. We will let you know when the last mailing has taken place. We request that you wait until at least December 16 to contact E&Y if you do not have your cheque.
If you have entitlement to a claim for “Pensioner Life (including ADB, if applicable)” based on data available as of December 31, 2010, you should shortly be receiving a cheque for 20% of your Form A claim amount minus withholding tax.
If you believe you have a valid claim for Life Insurance and it was not reflected in your Form A claims document, you should submit a Form C to E&Y. Please note that not all pensioners have Life Insurance claims.
As Nortel’s HWT proceeds to be wound up, we expect there will be a second and smaller distribution (~5 to 7%) from the HWT sometime in 2012. We will keep you apprised of developments.
The residual amount of your Pensioner Life claim (total claim minus the two instalments from the HWT) will be a claim on the Nortel Canadian estate payable at cents on the dollar when the estate is settled.
Also note that the NRPC along with KM are working to remove the taxation of the Life Insurance benefits. If we are successful, you may have to re-file your 2011 income tax to recover taxes paid. Hold on to your tax documents. Again we will keep you apprised of developments.
Please Note: There are a small number of individuals who received their Pensioner Life distribution payment by direct deposit in mid-November. If you have already received a direct deposit payment for this interim HWT distribution on account of Pensioner Life, then you will not receive a cheque in December. If you are a Nortel pensioner who has not received a direct deposit payment from the Nortel HWT in the past, then any HWT distribution you receive will be paid by cheque.
Pensioners who have a claim for Pensioner Life will receive HWT distributions on account of Pensioner Life in the range of approximately 27-28% of entitlement. As outlined in the Monitor’s Seventy-Sixth Report to the Court, the Monitor believes the total ultimate distribution from the HWT is likely to meet or exceed 33.8% of the value of the Participating Benefits. However, the value of the Pensioner Life relating to Pensioners will be reduced as a result of actual 2010 Pensioner Life premiums. The effective distribution to Pensioners, taking into account the 2010 premiums, as shown in the illustrative scenario is 27.6%.
The HWT distributions to survivors and disabled employees will not be subject to any reduction for 2010 Pensioner Life premiums. This applies to all survivor and disabled benefits, including distributions to disabled employees for Pensioner Life. Therefore, disabled employees who have a claim for Pensioner Life are likely to receive at least 33.8% of their Pensioner Life entitlement through distributions from the HWT.
These projections still remain subject to contingencies.