Who’s On The Legal Gravytrain?

By Mark Evans | Published: August 26, 2009

An interesting tidbit in the Ottawa Citizen about Nortel’s bankruptcy protection-related fees: During the first six months of the year, Nortel spent a whopping $182-million on bankruptcy-related costs, including $132-million on legal and accounting fees.

And before you think Nortel will spend less money given all of its assets are being dumped (aka The Nortel Garage Sale), Nortel said it expects to spend another $265-million over the next year, including $158-million on professional fees.

Mama, don’t let you baby grow up to be a cowboy; encourage him/her to be a lawyer or accountant.


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  • less

    Their peers and neighbors will inevitably force them to install state-of-the-art media rooms in their new upper-class digs, and former NT engineers will be on hand to install the coax cable right the first time.

  • zeroman

    The legal gravy train in North America is going to come to a halt. Like us poor displaced engineers from offshoring, the lawyers are getting offshored too. Where? India.

    Displaced lawyers are a bunch of people I will never shed a tear on.

  • GoProto

    “The RCMP is pursuing criminal charges against former chief executive Frank Dunn and some other executives, but U.S. prosecutors have quietly dropped plans for criminal actions, according to recent Nortel regulatory filings. A U.S. court in Dallas, which twice subpoenaed Nortel documents, has bowed out”
    ——————————————————-
    re
    Why? Why is the US dropping prosecution for criminal actions against execs?
    Anyone know?

  • NortelTragedy

    I'm sure the BoD, the SLT, and Mike Z have already seeded the gravy firms with their friends and family … kickbacks for sure. Enough $$$ for Judge Gross to pay his lawyer buddies from the country club, but not enough for severances, eh? This country needs a revolt, a revolution against the wealthy allowed to pillage from the labor and trust of the working class.

  • protosphere

    These huge hundreds of millions in fees get paid before creditors.

    Increased lawsuit insurance premiums (for $300M coverage) also get paid before creditors.

    This reduces value from a growing list of creditors by a substantial amount. What did they say, maintain value? Pay bonuses to keep talent? What do they get? Less value as even the fewer board members left get paid more and I'd bet excusing it on the grounds they do more with fewer but did the fewer employees get a raise?.

    Nortel is seen to be doing whatever it wants with its powerful contacts and enough legal power to rewrite the very laws of physics it seems.

    Enron never had a fraction of its liberties or got away with any of these stunts. OSC fined them nothing as RIM got an unprecedented fine. Does it pay to hire high profilers that are as unlikely to be chased as impeaching a president to lied on national television.

    What legal system can be met with a blank stare in so many situations so as to be challenged in what laws are blatantly violated to effect so many yet reward so few.

  • protosphere

    The civil charges are still pending by the SEC.
    Same thing happened at Enron, first comes the civil charges and then the groundwork is laid for the Department of Justice to move in.

    It has been reiterated they will get away with murder and it will be difficult to prove but they have mountains of paper on this and with so many still there I anticipate plenty of more subpoenas, regardless of how hard their lawyers try and keep them off the stand or providing more information. I anticipate a a long winded yet heavy handed outcome when all is said and Dunn… No degree of social political or economic power can save them from the Department of Justice's fate when the SEC and not the Canadian courts are able to uncover so much more.

    In Canada they would probably reward the buggers but civil trials by the SEC stand in the States and Dept. of Justice will be all ears sporting an evil grin… wait, more to come on this… never mind the Canadian press until the US gets their hands on them, SEC first then wham, Dept. of Justice…

    Ebbers/Skilling got quarter of century sentances, Dunn wouls be unlucky to get only 7 here and walk in 2… In the U.S. though it is a totally different ball game.

    The next most fascinating series of events in this saga… the fraud trials for the largest fraud in Canada.(and we witnessed post fraud events to deflect)

  • protosphere

    Also:
    http://news.gc.ca/web/article-eng.do?m=/index&n…

    The cooperation received from the Ontario Securities Commission, the Dallas Field Office of the Federal Bureau of Investigation, the United States Securities and Exchange Commission, and Nortel Networks itself, enhanced the ability of the RCMP GTA IMET to advance the investigation.”

  • GoProto

    Ok, now it makes sense. I forgot about what part the civil litigation plays in laying the groundwork.. The Ottawa article (intenionally?) made it seems like we (US) were walking on this which flipped me out.
    Yeah, I was so relieved about the sentences that Ebbers/Skilling got and of course Lay would have too if he didn't take the easy way out ;o)
    You are right about the SEC/DOJ, if they went after (and won) Martha, think about what they will do with this fraud dog. I'll be watching..

  • zeroman

    30c for every $ that comes in from an asset sale will go towards consultants, lawyers etc.

    so assuming:

    asset sales: 3 billion
    costs 30%: 900 million
    ———————————-
    sale cash: 2.1 billion
    cash: 2.5 billion
    ———————————-
    total cash: 4.6 billion
    debt: 10 billion

    means 46c for every $ available to creditors. if this even goes down marginally, there is not much left to give unsecured creditors.

    WOW! seems the only ones to gain are the comapnies buying assets and lawyers / consultants leeching Nortel.

    If there is a way not to operate in Chapter 11, Nortel is proof of it.

    that leaves 2 billion and another 2.5 billion in cash totalling 4.5 billion. debt is over 10 billion. that is 45c for every $.

  • RedFlag

    There's no difference between chapter 11 and chapter 7 in Nortels case. Really, why protect the company if the end game is to sell everything off and not exist?

    We are led to believe there's a big difference. The only difference is things get to drag on in chap 11 so funds can be siphoned off to accountants/lawyers/judges etc.

    I wish true justice could be done to the people that really ruined this company and its shareholders.

  • gone2moro

    Only $182M… wasn't it $400M to re-do the checkbook that Frank Dunn had cooked… cheaper to go Chpt 11.

  • marakiexnortel

    In-house lawyers are going trough a nightmare since the filing events. Insolvency and liquidation has been very painful and destructive to most of them. The legal team has been forced to experience the elimination of Nortel's policies and principles on external counsel usage. And what about the Administrators, sic E&Y?. They are the ones making the real huge money out of all this mess. Anyone has a clue on how much E&Y is been paid?.

  • NortelTragedy

    Mike Z was brilliant … what a star! He should be proud … for ruining a 116-year legacy. Loser.

  • GoProto

    I concur and have brought this up numerous times on the AAN site. It was a sham, thru and thru to present themselves as a CH11 filing, and you hit the nail on the head- all for one reason- siphon funds to insiders and away from shareholders and employees. It is literally disgusting, and seeing what they were doing all along, and never coming up with the promised re-structuring plan- someone legally should have put an end to this. It seems they can do whatever whenever they want to and no one is stopping them.

  • GoProto

    “If there is a way not to operate in Chapter 11, Nortel is proof of it”
    ————————————————————
    If there is a way to behave like a fraud company whether you are solvent or in CH11, Nortel has accomplished both with ease.
    Even fradulent about how to handle the eventual ruinous outcome of their fraud.
    Amazing.

  • zeroman

    anybody serious about writing a book. maybe we can have it published and donate the proceeds to a fund for severance, pensions etc.

    only problem – not sure how many would read it.

    or can we get some money from the feds on how to prevent this from happening again by doing a study.

  • yes4aapl

    re
    I read so many articles about $50 mill scam in Montreal.
    I did not see many articles lately about Nortel defrauding shareholders of $400 bill! or creditors_bondholders of $4.5 bill!
    Read my lips.
    Nortel knows how to defraud bondholders as It did with shareholders.
    Who remembers Nortel's shareholders?
    The real owners of Nortel corporation?
    If pensioners get the secured creditors status bondholders will get nothing!
    MatPat should send me a check for the warnings.
    Do I like pensioners?
    Yes I do.
    I just want the game played fair.

  • yes4aapl

    You are right about the SEC/DOJ, if they went after (and won) Martha
    ===
    re
    I did not accept Martha's Kostyra punishment!
    I am angry about that.

  • less
  • whatnext4nt

    “Mama, don’t let you baby grow up to be a cowboy; encourage him/her to be a lawyer or accountant.”

    And discourage them from becoming an engineer.

  • zeroman

    also allows people continue with their crap jobs. example hr under donovan, m&a under riedel, all the presidents and vps sitting around earning in excess of 300K annually.

  • zeroman

    Z said he stabilized Nortel. Anybody read this crap. Is the Finacial Post now as good as toilet paper.

    http://www.financialpost.com/news-sectors/story…

  • horace_grimswold

    There's a lot of valuable copper on that plaque that could be melted down and sold off to pay the pensions of all the names on it.

  • tryn2makealivin

    And continue to pay out bonuses throught Chapter 11 …PRICELESS……….

  • horace_grimswold

    It is not illegal to pummel a business into the ground in Canada.

    The U.S. has a legal system by which bad people can be identified and whatever charges necessary can be laid to rid them from the free world. Innocent until proven guilty, right?

    Nortel had better hope that none of their offices have roots in Patrick Fitzgerald's DA territory. If so, perhaps Mike, Frank, and Conrad will get to know each other real well.

  • GoProto

    Are you kidding? many people would read it..we need some of the major posters to help with all of the back -log of docs, and I know they can but will they?
    This IS a story worth telling.. from beginning to end..

  • GoProto

    Yea- Patrick Fitzgerald.. a real force to be reckoned with.. he doggedly pursues his prey. He is a Labrador Retriever. He grabs hold of your arm , doesn't let go until he gets his answers. Not out for the immediate kill, he bides his time and does things through the proper channels, but he usually gets his man..

  • LM

    this will become an mandatory analysis and report in all MBA programs

  • 4merEmployee22

    Go to their website and be surprised that they will get a guaranteed fee of
    more than $5,000,000 million dollars US for some 7 months Legal Service work!

    Also, they set up an ESCROW ACCOUNT too! Is this Legal? or Legal robbery?

  • likmyassho

    Mike Z holed up in his office —- waiting to cash his $400M check!

  • likmyassho

    Mike Zafarowski is a puta. Joel Hackey is a chocha.

  • 4merEmployee22

    “Conflict – Of – Interest” seems not to apply to NORTEL anymore!!!

    They make new rules as they go along for their own convinience! In pursuit of
    the mighty dollar!!! “I want more is their CREED”.

    How do you really explain these to a kid? Huh? Bankruptcy Protection?
    Protection from WHAT????????????????????????

    Isn't the CCAA and Chapter 11 God's gift to CEO's and BOD's??? and Lawyers?

    CCAA is a diguise to make arrangement payments for bonuses and hefty
    lawyers fees!

  • The psychiatrist

    That's right they will do as they please,I think it's time people WTF up and never put any faith in either Church,state(government of any kind)lawyers,doctors and most of all Corporate America.

    What do all of the above have in common?

    there all wearing a facade to pillage as much as possible from the system and millions that put faith into it by way of accepting this BS they call a democracy,all the while defending their pillaging as justified.

    The level of self entitlement that so called society's elite exhibit is disgusting,the real sickening part in all of this is that they have actually convinced the masses that the system is fair and accurate.

    You know the police will run after someone for stealing a t.v but it's the people who wear suits amd ties that commit more harm to the general public than any street thug could ever do.

    Be weary of those who wear suits and ties for a living and trust no one and you will see how much better of you will be in the end.

  • less

    It does rather remind me of a tiny Washington DC with its Reflecting Pool, the flags, the Vietnam War Memorial with names of the fallen inscribed, and the buildings dedicated to former leaders, an aura of history (lessons)….

    So who's occupied yer old haunts? Avaya? E///? Nokia? Cisco? ALU? Radio Shack? Anybody there needing a few of the good people?

    Its much more cosmic than that:

    http://nashville.citysearch.com/profile/map/601…

  • golfingpokerplayer

    Based on the actions of Nortels upper management, I now agree that Nixon was not a crook. At least compared to these people.

    If anyone hears where Mr. Z is going to land, please inform me so I don't submit a resume to that doomed company.

  • Moose_Chaser

    <Groan !>

    Willie Nelson and Waylon Jennings, you're not !

    MC

  • zeroman

    ok who with good liteary skills is interested then.

  • zeroman

    if it is motorola then nortel should sue them

  • less

    I'll send a letter of protest to them stating I will avoid buying any shares or products from a company that obviously has an impaired sense of morals and ethics.

  • bankrupt_bob

    Maybe, just maybe, z will get struck by a falling asteroid ;>)

  • ntlifer

    CVAS and it's CVoIP remain a dominant #1.

    Keep working hard and filling their(management, attorney's, accountants, etc…) pockets. Us peons will be left with nothing for all the work we do.

    http://voip-phone-systems.tmcnet.com/topics/voi…

    Recently published reports from Infonetics Research and Dell'Oro Group have ranked Nortel (News – Alert) as the global leader with the largest revenues in the carrier IP market for the second quarter of 2009. The next-generation technologies from Nortel support multimedia and business-critical applications for both service provider and enterprise networks.
    Nortel has maintained its global leadership position for carrier softswitches with 30.2 percent market share in Infonetics Research's (News – Alert) recent report, “Service Provider VoIP Equipment and Subscribers Market Share, Size, and Forecasts – 2Q09”. In addition, Infonetics also revealed that Nortel kept its position as the dominant softswitch supplier in both North America and EMEA during the second quarter of 2009.
    According to Diane Myers, directing analyst, service provider VoIP and IMS for Infonetics Research, their Service Provider VoIP report found that Nortel extended its revenue market share lead in the worldwide carrier VoIP market during the second quarter of 2009. It was also found that Nortel lead the North America market with 56 percent revenue market share and also held the number one position in Europe at 27 percent revenue market share for the second quarter of 2009.
    A recently published report from Dell' (News – Alert)Oro Group has also ranked Nortel CVAS number one in overall carrier VoIP global revenue. The report “Carrier IP Telephony Report, 2Q09” also states that Nortel CVAS has retained this position since 2002, an admirable seven and a half year stretch.
    According to Samih Elhage, president of CVAS, Nortel, it is the hard work, dedication and expertise of their employees combined with the trust and loyalty from customers that continues to help Nortel's CVAS business maintain its lead in the carrier softswitch market. The Infonetics and Dell'Oro recognition is proof of Nortel’s carrier VoIP and telephony expertise and track record in transitioning TDM to VoIP services.
    Nortel CVAS has announced significant solution and product enhancements to its Communication Server 2000, Adaptive Application Server and CS 1500 products in the past few months. These enhancements will help carriers to drive operational efficiencies and increase revenue potential and subscriber satisfaction. Nortel has shipped more than 115 million Carrier VoIP and Multimedia ports to more than 350 wireline and wireless carriers globally. In addition, Nortel CVAS has customer deployments in all continents with leading carriers. Nortel also provides VoIP solutions to two thirds of IDC's (News – Alert) worldwide listing of top 20 carriers – by revenue.

  • NextOnTheList

    Still worrying about almost-late Nortel giving away cash to the benefit of the usual vultures? Looks like this blog is going in circles…

    To me, this is the ultimate scandal: all these guys tearing apart the last pieces of flesh. They can try to swallow as much as they can, personally I don't care anymore. I am disgusted.

    Sad, but true.

  • slk

    Sadly, I couldn't agree more. Worst profession ever.

    Who would have thought that “making things” and innovation would become passe in Canada… real estate, government bureaucrats, lawyers, bankers, MBAs, etc – these are the places to be. I can't quite figure out how we will have a functioning economy when everyone works in these fields, but what I do know, I took engineering.

  • less

    I heard that outsourcing proofreading overseas can keep costs down….

  • whatnext4nt

    I agree, this is a story that must be told and will be of wide interest. Need some people who were on the inside at the high level to talk.

  • GoProto

    “…all these guys tearing apart the last pieces of flesh. They can try to swallow as much as they can,”
    __________________________________
    re

    That's what Turkey Vultures do…

  • whatnext4nt

    I agree, this is a story that must be told and will be of wide interest. Need some people who were on the inside at the high level to talk.

  • GoProto

    “…all these guys tearing apart the last pieces of flesh. They can try to swallow as much as they can,”
    __________________________________
    re

    That's what Turkey Vultures do…

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