Nortel to fight UK pension claims


Nortel to fight UK pension claims

Alex Scroxton

Nortel has joined forces with representatives of bankrupt financial house Lehman Brothers to fight demands that they cover deficits in their UK pension schemes.

The UK Pensions Regulator is seeking to recover £2.1bn from Nortel and approximately £150m from Lehman Brothers.

A hearing has been scheduled for November.

As previously explored by MicroScope, over 40,000 members of Nortel's pension scheme stand to lose out if the money is not recovered.

An attempt had already been made to force Nortel to pay up, but was shot down by US courts which demanded UK authorities honour a legal stay placed on lawsuits against the vendor while the company remained in Chapter 11.

However the Regulator subsequently issued an FSD (Financial Support Direction) against Nortel in July after its appeals were rejected.

At the time, Pensions Regulator executive director for delivery June Mulroy said: "Companies within the Nortel group benefited from both the activities of Nortel Networks UK - and from the failure by the controlling Canadian companies to allow the UK company to repair the sizeable pension deficit."

Should the Regulator prove unsuccessful, there could be serious implications for the UK Pension Protection Fund, the organisation set up in 2004 to compensate members of defined benefit schemes whose employers have gone bust with insufficient assets to cover pensions owed.

The scheme is already over a billion pounds in the red.

The Pensions Regulator does not comment on ongoing legal matters.

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