"That's because the 800-lb gorilla at the negotiating table is Nortel's deficit in its defined-benefit pension plan, and one of the key pension regulators in this saga is the Financial Services Commission of Ontario, an arm of that province's government.
According to court documents, Nortel had a shortfall of US$1.8-billion in 2007, well before the fall market meltdown. A recent RBC analyst report pegs the deficit at US$2.8-billion. The court monitor states only that the funding deficit has "significantly increased" since 2007.
In 2008, Nortel ended its defined-benefit pension offerings for Canada and the Unites States and created defined-contribution plans, so the problem is a legacy issue."
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