Blood in the Bankruptcy Waters Draws Claims Traders to Ex-Nortel Employees
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It’s fish-in-a-barrel shooting season over at Nortel Networks Corp., with claims traders peppering ex-employees with offers to pay 70 cents, 80 cents or more for their bankruptcy claims, The Wall Street Journal reported on a Daily Bankruptcy Review story. That’s not to imply the liquidated telecommunications company’s discarded workers are easy targets. Nortel, generally speaking, hired bright people. They’re certainly smart enough to figure something’s up when folks in the bankruptcy business, the claims traders, are willing to bet that severance and other pay that dumped employees had written off years ago is going to come through. But a long wait for word from Nortel, coupled with confusion about the communications that are finally arriving, goaded some to take the claims traders’ money and run, knowing they’re likely leaving a good chunk of change on the table. “I just got tired of waiting,” said one former Nortel employee who sold his claim. Nortel collapsed in January 2009, leaving many without jobs and without severance pay in a rocky economy. Now Nortel’s sitting on some $9 billion in cash and has begun to sift through employee claims, sending out notices that say what the company thinks those claims are worth. Claims traders pay a discount keyed to the risk a bankruptcy claim will be refused. Nortel has been sending out notices that, to the traders’ experienced eyes, alleviate a lot of the risk. Read more. (Subscription required.)