Nortel Networks Corporation – 51
November 9, 2011
INTERIM HWT DISTRIBUTION IN RESPECT OF PENSIONER LIFE INSURANCE
The Court on November 8, 2011 approved an interim distribution from the Nortel Health and Welfare Trust (HWT) on account of pensioner life insurance. To view a copy of the Order, please click here. This means that each pensioner and disabled employee who has an entitlement to pensioner life insurance can expect to receive a distribution from the Nortel HWT before the end of 2011.
Interim distributions have previously been made from the HWT in relation to LTD Income, SIBs, STBs and LTD Life and LTD Optional Life. No interim distribution has yet been made on account of pensioner life insurance benefits, as the process for confirming pensioner life entitlements, including relevant personal information and level of coverage, for making distributions to pensioners was not as advanced as it is for the LTD beneficiaries of the trust.
The Former Employees’ Representatives and the CAW requested that a distribution be made as soon as practicable to pensioners in order to alleviate to some extent any hardship pensioners may be experiencing as a result of the recent reductions to registered monthly pension payments. The LTD Beneficiaries’ Representative and the CAW have also requested that a distribution be made to LTD Beneficiaries on account of their future pensioner life insurance claims from the HWT. Given these concerns, the Monitor recommended to the Court that an interim distribution be made to all Participating Beneficiaries of the Nortel HWT who are entitled to pensioner life based on the date and claims value established for the Compensation Claims Process. The payment to be made is at the level of 20% of the total Pensioner Life liability and will result in an aggregate distribution of approximately $22.2M to Pensioner and LTD Beneficiaries of the trust. The Monitor is of the view that this recommended level of distribution will permit adjustment in a future distribution both for corrected personal information and to adjust for any difference in the HWT Allocation Methodology and the Compensation Claims Methodology. Therefore, no prejudice will result from this interim distribution.
The Representatives and their advisors, including Independent Counsel, and the CAW agree that an interim distribution to Participating Beneficiaries on account of Pensioner Life should not be delayed while Pensioner Life data and claims values are being confirmed.
The Monitor’s motion was approved by the Court on November 8, 2011. It is now expected that this interim HWT distribution will take place before the end of the 2011. Distributions in respect of life insurance are taxable and will be subject to withholding tax. A withholding rate of 10% will be applied to the majority of the claims, however, there are some larger distributions that will be subject to a higher withholding rate.
It is possible you may experience delays as a result of a lack of complete information relating to the retiree group. Please be patient and understand that such errors will be corrected once the proper information is obtained.