The Nortel UK pension scheme is set to receive over £1bn as part of a settlement from the company’s assets after pursuing claims for more than eight years.

The figure is part of an approximate US$7bn ‘lockbox’ containing the sale proceeds of Nortel’s business and assets. In 2015, courts in the US and Canada decided the $US7bn should be divided on a pro-rata basis, based on creditor claims. However, multiple appeals were subsequently launched against the judgments in both Canada and the US.

At the same time, the parties embarked on negotiations which continued for more than a year, in a last ditch effort to resolve the dispute. Their efforts culminated in success in October 2016, but a detailed and complex process of creditor and Court approvals had to be worked through for the settlement to become final.

Last week Judge Gross in the US and Justice Newbould in Canada, made orders permitting the core parties to implement a settlement and finally distribute the US$7bn of Nortel's residual assets to its creditors all over the world. The UK pension scheme is one of its largest creditors and is therefore set to receive in excess of £1bn.

Commenting, Trustee chair David Davies said: “The trustee is absolutely delighted. It has fought a long and brave battle to get to this point, and is now weeks away from receiving the first tranche of a total recovery estimated at in excess of £1bn for the members of the Nortel UK Pension Scheme.

“These former employees of Nortel UK helped create the worldwide wealth of the telecoms giant, but when Nortel collapsed in 2009 they were left with a huge hole in their pension fund. They have waited a long and anxious time for the end of this battle,” he said.

Davies also thanked the efforts of the Pension Protection Fund in working towards this outcome and said he was “grateful for the valuable protection the PPF has provided to scheme members during this time”.

“The trustee will now get on with the difficult task of trying to buyout member benefits with insurance companies that we hope will secure higher than PPF levels of benefits,” he added.

The trustee of the scheme has been advised by Hogan Lovells since 2010 and its head of pensions litigation Angela Dimsdale Gill said: "The anticipated opening of the lockbox is a tribute to the courage and determination of the Nortel UK Pension Trustee. It is also the product of a lot of hard work over many years by an intensely committed team of clients and advisors. We are proud to have played a central role in delivering this solution for a large number of Nortel pensioners."

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