Nortel Provides Bankruptcy Update

By Mark Evans | Published: February 11, 2010

It’s been a long time since Nortel talked about the bankruptcy protection process, which started more than a year ago before moving into the “let’s sell everything but the kitchen sink” mode last June.

Today, Nortel issued a press release that talks about well it has done in managing the bankruptcy process and the asset sales, and how it has collected $1.2-billion more in proceeds than the original “stalking horse” sale agreements.

To be honest, it come across as self-congradulatory at a time when thousands of people have lost their jobs – most without any severance.

Nortel said it has raised more than US$2 billion in net proceeds from the completed sales of businesses, and that it expects to another US$1 billion from the completion of the previously announced sales of its Optical Networking and Carrier Ethernet (MEN), GSM/GSM-R and Carrier VoIP and Application Solutions (CVAS) businesses.

The gist of today’s announcement is that Nortel wants to retain a bunch of corporate employees who are “critical” to completing the “remaining work”, which involves selling off the rest of the assets.

As well, Nortel wants to explore “strategic alternatives to maximize the value of the Company’s intellectual property”. Now, this is interesting because it raises the possibility that Nortel could continue as a patent-holding entity that would generate licensing and royalty revenue.

Among the most coveted and valuable patents within the 3,000+ portfolio are about 100 related the LTE (long-term evolution) technology.


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  • less

    Cue the soundtrack applauding Her, the old gal –

    http://www.youtube.com/watch?v=OafqYNCzq5U

  • techorama

    This key employee retention plan is really just taking the p*ss now. Why would anybody who's stuck with a company from being the most prestigious employer in Canada to completely bankrupt; a person who has survived 30 odd rounds of layoffs and has now finally been put out of their misery by moving to a new employer…why on earth would that person now be itching to leave unless they are given a retention bonus?

    I can confidently say that every single person that I know who now moved to a new employer through these business unit acquisitions is breathing a sigh of relief….not one of them is now planning on jumping ship…it just makes absolutely no sense.

  • bankrupt_bob

    “But they ended up by sleeping in a doorway.”

    ….how prophetic.

  • scalppeeler

    That is not the takeaway I read.
    The Key Retentions are for people who were not taken by another business.
    They remained working for nortel.
    The new buyer has concerns that certain things may not get done and the people
    who are presumed to be doing this are still working for nortel.

  • Nortel watcher

    the plan makes very little sense…any employee this vital to the success of transitioning a business unit to its new owner would have been hired by the new owner, not left on the sidelines….I smell another “beauty contest” with friends taking care of friends

  • scalppeeler

    That's a good point

  • DevilsAdvocate

    Although I agree that there is likely some friends taking care of friends type activities going on I must disagree with the idea that any employee who's vital to the “transition” would have already been hired by the buyers. Since according to the media this is for NBS and Corporate, a large number of employees in scope for this plan would probably be IT employees (within NBS). The buyers of the business units have no desire to take them on, they require the knowledge that they hold, but have no desire to pay their salaries or their severance once the transition is complete and they're not needed anymore. This is a convenient way to get those people to stick around while they're useful and leave the dirty work of getting rid of them to Nortel and their bankruptcy process.

  • techorama

    You may be right….I've lost track of who is getting each round of bonuses, I just read the part where it says that it was a condition of the sale that the acquiring company had to pay out its share of the bonuses and so assumed that the bonuses were going to people who had moved to the new companies.

    But here's an idea to save some money so that there will be some left over for those who are actually owed money. Pay out the retention bonuses at the end of these dealings and let people know what they will receive on completion of the deals….you know….like a retention bonus. Not continue to keep paying out every quarter to the same people to continue to do the work they are paid to do anyway.

    Why are the courts so completely frickin clueless? We've already had precedents of people like the “Chief Legal Officer” collecting his retention bonus and then quitting.

  • exNTII

    there is no way they will continue. this is a complete wind down so quash any hopes that an entity will continue on.

  • hangingbyathread

    Retention plans at the close of Chapter 11 is normal action. There are key activities that need to be completed to close the doors – Don't you think some key individuals with some history and intellegence need to be around to ensure I.T. services like the zillion systems and data being transitioned over to the new buyers is done properly for the sake of the people who were lucky to get transitioned. Folks are needed to work on transitioning and working settlements with the monitors and lawyers – the LTD/Pensionor lastest settlement being an example ….No key talent in the right mind is going to stay without an incentative …everyone is looking.,,,Wouldn't you want someone experienced and knows the history versus some temp off the street to muck it up in the last days for the companies that bought nortel employees or people on current benefit plans i.e pensioners? Nortel's environment has never been simple……..It's not a fun place to work listening to everyones woos and your friends walked out without severance. Honestly I don't think the plan is going to keep people if the job market picks up which is a risk regardless. The BoD is responsible don't beat up the poor souls still there we've been beaten enough

  • freqmgr

    At the close of Chaprter 11 maybe. But these folks don't seem to have any intention of closure. I do clearly remember a Richardson based PR person in a meeting saying that Nortel would ask for, and receive, as many extensions as Nortel felt necessary. The message was very clear….that the end date would come when Nortel's “leadership” wanted. I presume that she is still part of the business.

  • freqmgr

    At the close of Chaprter 11 maybe. But these folks don't seem to have any intention of closure. I do clearly remember a Richardson based PR person in a meeting saying that Nortel would ask for, and receive, as many extensions as Nortel felt necessary. The message was very clear….that the end date would come when Nortel's “leadership” wanted. I presume that she is still part of the business.

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