Canadian Personal Finance Blog

With Nortel’s bankruptcy protection announcement yesterday there is a sickening scenario for some very unlucky folks (many I know personally). Today’s title comes from one of my favorite expressions, “Sometimes it’s better to be lucky than talented”, and that is how I feel right now.

I  am OK

As background let me outline what has happened to me, in terms of my lay off.

I was notified of my redundancy on July 30th of last year, due to restructuring. This meant that for the next TWO months I would still be on the Nortel payroll and I would have access to my office and such and I could look for jobs inside of Nortel. On the 30th of July I was also given the specifics of my severance package (I cannot disclose the terms of this agreement).

As part of the severance procedure, I had an option  to either take my entire severance payment (lump sum) on September 30th or I could take some then and delay some until January 2nd of this year. I did split the lump sum payment and received part in September and part in January.

I also was given the option to opt out of the Nortel pension plan, and I did so, and I received those funds just before Christmas as well.

All this means Nortel owes me no more money (there is a small caveat to this, which is not worth mentioning), thus Nortel filing for bankruptcy protection has no direct effect on me financially.

Some are Not So Lucky

For those who were notified of their redundancy after November 16th 2008, they now are in limbo (or possibly hell, I am not sure). I have heard from one former associate that his severance package is now “gone”, because he has not received it yet.

I do not know if this is just hearsay, rumor or fact, but it is a possibility. The severance package becomes part of the liabilities Nortel owes, and it may well be that these severance packages are now simply “unsecured debt” and must be dealt with as part of bankruptcy protection.

If these folks do not get their packages this would be diabolical (in my opinion) and I really hope this is not the case, but I suspect it is a real possibility.

As for pensioners (retirees from Nortel) I do not know where this leaves the pension plan, given it is underfunded and the repayment of the short-fall must be dealt with as part of the bankruptcy protection plan as well.

In terms of investors, anybody who still holds stock in Nortel is out of luck, the paper is worthless (at least that is my guess, I am willing to hear arguments to the contrary) and the Bond holders are now part of the bankruptcy protection plan as well.

Bad Day Financially and Other Ways too

A sad day for me, seeing a company that I worked for and enjoyed most every day there take another step toward oblivion, and now many of my co-workers and former compatriots are in a “bad way” thanks to some very questionable decisions by the Senior Management Team.

I remember I was at a GIS where the present CEO Mike Z. was attempting to put a friendly smile on the capping of the pension scheme, and a former co-worker went up to the mic and berated the CEO and asked the pointed question at the end, “… I don’t know how you sleep at night!”, I wonder how Mike Z. is sleeping these days?