Elliott Greenleaf has settled the claims of disabled employees in the Nortel chapter 11 cases pending in the United States Bankruptcy Court for the District of Delaware for a $28 million allowed unsecured claim. The settlement, negotiated with a committee of disabled ex- employees, is the third Nortel has reached with different groups of former U.S. workers.

Nortel, based in Mississauga, Ontario, filed for bankruptcy in the U.K., France, Canada and the U.S. in 2009. Since then the company has been selling assets and negotiating with bondholders, former workers and other creditors about how to split $9 billion in cash and claims have traded at or around 90 cents on the dollar. Nortel Networks Corporation, formerly known as Northern Telecom Limited and sometimes known simply as Nortel, was a multinational telecommunications and data networking equipment manufacturer headquartered in Mississauga, Ontario, Canada. It was founded in Montreal, Quebec in 1895.

The former Nortel long term disabled employees (“LTD Employees”) had a wide range of benefits, including medical benefits and income continuation insurance proceeds, which were set for termination twice during the proceedings.

Elliott Greenleaf was successful in requesting that the Judge appoint an additional creditors’ committee under 11 U.S.C. 1102. The Nortel LTD Committee is the first such committee for disabled workers.

Working alongside the Retiree Committee, appointed under 11 U.S.C. 1114, the firm worked tirelessly to secure a negotiated deal for over a year, hopeful to find replacement medical coverage with the retirees. When it appeared unlikely that such coverage would be available, the LTD Committee had joint and separate mediation sessions with the Retiree Committee, Debtors, Unsecured Creditors Committee and Ad Hoc Noteholders Committee which had been ordered by the Court.

Litigation commenced regarding the termination of benefits after months of Court ordered mediation. Shortly after the end of fact discovery, the firm filed a class action complaint alleging ERISA fiduciary duty violations and seeking equitable remedies for the consequences of the actions alleged to have been taken by Nortel as an ERISA plan sponsor. After several lengthy revived mediation sessions, Elliott Greenleaf, led by Rafael Zahralddin as LTD Counsel , negotiated the landmark settlement.

Elliott Greenleaf was able to secure a $28 million claim for the 195 remaining employees under the benefit plans in late 2012. The Retiree Committee was able to secure a settlement of $66.9 million for over 4400 retirees shortly before the LTD settlement.

Significantly, Elliott Greenleaf’s efforts allowed for benefits to be paid through June 30, 2013 when the plans will be terminated as part of the settlement. Workers in other jurisdictions were not so fortunate with benefits cut in Canada soon after the filing in 2009.

Mary Kohart was approved as class counsel for the class action for the firm. Rafael Zahralddin, Shelley Kinsella , and Eric Sutty have served as LTD Committee counsel on behalf of the firm. Henry Siedzikowski , Deborah Simon and Margaret Curran served as employee benefits counsel to the LTD Committee on behalf of the firm.