Nortel Networks U.K. pension proceeding stay enforcement granted

By Caroline Salls

Pittsburgh, March 9 - Nortel Networks Inc.'s motion to enforce the automatic stay imposed by its bankruptcy filing in connection with potential U.K. pension proceeding financial responsibility claims has been approved by the U.S. Bankruptcy Court for the District of Delaware, according to a Tuesday court filing.

Specifically, the company asked the court to enforce the automatic stay against claimants Nortel Networks UK Pension Trust Ltd. as trustee of the Nortel Networks UK Pension Plan and The Board of the Pension Protection Fund in connection with their participation in U.K. administrative proceedings.

Nortel said the trustee and board have filed claims under proceedings related to Nortel Networks Inc. and Nortel Networks (CALA) Inc.

According to the motion, the proceedings were filed to determine whether to issue a financial support direction against the Nortel entities that have been identified as targets of the proceedings to establish a predicate for imposing financial responsibility on those targets for Nortel Networks UK Ltd.'s liability under section 75 of the U.K. Pensions Act 1995.

Nortel said the automatic stay should protect it from adjudication of potential financial responsibility outside of the bankruptcy court.

In his ruling, judge Kevin Gross said "the automatic stay applies to the efforts of the trustees and the PPF to grab at debtors' assets when there is already a procedure in place for the allocation of the multi-national debtors' assets."

"The U.K. proceedings are premature and prejudice the ultimate literally global resolution of these bankruptcy cases," Gross said in his opinion.

Nortel, a Brampton, Ont.-based manufacturer and supplier of telecommunications networking equipment, filed for bankruptcy on Jan. 14, 2009. Its Chapter 11 case number is 09-10138.

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