CBCnews

Former Nortel exec seeks $1B protection from lawsuits

Last Updated: Thursday, December 17, 2009 | 6:01 PM ET

Former Nortel CEO John Roth, pictured here in 2001, filed a U.S. creditor claim on Dec. 1 seeking $1 billion from Nortel if he loses a series of class-action lawsuits filed by former employees. Former Nortel CEO John Roth, pictured here in 2001, filed a U.S. creditor claim on Dec. 1 seeking $1 billion from Nortel if he loses a series of class-action lawsuits filed by former employees. (Jeff McIntosh/Canadian Press)

A former Nortel CEO who took millions with him when he left the company in 2001 wants Nortel to cover up to $1 billion of his costs if he loses a series of class action lawsuits filed by former employees.

John Roth, who was in charge when the company's stock soared in 1999 and 2000, filed a U.S. creditor claim in a U.S. bankruptcy court on Dec. 1 seeking a $1 billion U.S. indemnification from Nortel of his personal assets with respect to those lawsuits. When he left the company he took $130 million with him.

Essentially, Roth is seeking insurance to cover him in case U.S. courts decide he must pay an award to the plaintiffs.

U.S. Nortel employees and former employees filed the lawsuits around four years ago against Nortel and those at the company who were responsible for managing the company-sponsored investment plan.

One of them claims that the defendants were "intimately familiar with the company's ailing finances" in the preceding five years but still helped and encouraged plan participants to invest in the company "despite the unsuitable nature of such an investment."

Diane Urquhart, an independent financial analyst who is helping some former Nortel employees, said the plan, known as a 401(k) plan, is similar to Canada's Registered Retirement Savings Plans.

The lawsuits would have been stayed when Nortel filed for bankruptcy protection this past January, Urquhart said.

"But John Roth must be concerned that there is merit," she added. "It is his own personal assets that are at stake."

Good target: analyst

She added that Roth is a "good target" for the lawsuits because he left the company in 2001 with more than $130 million in stock options, bonuses and retirement benefits.

Urquhart has been providing financial analysis services to help former Nortel employees who are fighting for the severance, pensions and disability benefits that the company owes them. She has taken up similar causes in the past.

Melanie Johannik, who was laid off from Nortel this past year and is still looking for a job, chairs a group called the Nortel Bankruptcy Justice Committee, which is also lobbying on behalf of laid off, retired and disabled Nortel workers.

She wasn't impressed by the news of Roth's latest court filing and has been wondering where all Nortel's money went.

"All now all of a sudden you can get lawyers and insurance to help claim for another billion dollars in insurance," she said. "It just doesn't make sense."

Nortel filed for bankruptcy protection in January and has been selling off units ever since. The company is expected to cease operations once that process is complete.

Laid-off and retired Nortel workers are considered unsecured creditors and are at the back of the line to receive payouts from bankruptcy proceedings, including severance packages, pensions and disability. That means they would have to fight with other creditors for a share of whatever is left of the company in the end.

Roth, who lists an address in Orangeville, Ont., on his court filing, first joined Nortel as a design engineer in 1969. He was named president and CEO in 1997 and presided over the company as its stock price soared in 1999 and 2000.

The company's fortunes began sliding in 2001, and Roth retired that year.

  •  
 

IN DEPTH: Nortel

Features

Canada's technology shining star becomes financial black hole
Is Ottawa still Silicon Valley North?
Nortel struggles a 'big blow' to research in Canada (Jan. 14 2009)
HISTORY: Nortel's Icarus-like stock
The wild ride of Canada's most-watched stock
TIMELINE: The rise and fall of Canada's tech sweetheart
Interactive: Key dates for Nortel in the past decade
Bankruptcy protection
When a company seeks court protection while it re-organizes

YOUR VIEW

Has Nortel's downward slide over the years affected you personally?

From CBC News

Former Nortel workers could get paid earlier than other creditors: court
(Monday, June 29, 2009)
End of an era as Nortel shares delisted from TSX
(Saturday, June 27, 2009)
Nokia deal launches Nortel's liquidation sale
(Monday, June 22, 2009)
Nortel selling wireless business to Nokia Siemens for $650M US
(Friday, June 19, 2009)
Would-be Nortel buyers seek $1B loan from government
(Tuesday, June 9, 2009)
Nortel seeking bonuses for top execs
(Friday, March 20, 2009)
Nortel loses $2.13B US in Q4
(Monday, March 2, 2009)
Nortel cutting another 3,200 jobs (Feb. 25, 2009)
Nortel Networks files for bankruptcy protection (Jan. 14, 2009)
VIDEO: Nortel Networks files for bankruptcy protection (Runs: 3:20)
AUDIO: CBC's Julie Ireton discusses Nortel's future on Ottawa Morning (Jan. 12, 2009)
VIDEO: Interview with Duncan Stewart, financial analyst for DSAM Consulting (Jan. 14, 2009)
VIDEO: Lawrence Surtees, telecom analyst with IDC Canada, on Nortel's outlook (Jan. 14, 2009)
VIDEO: Havard Gould reports: The rise and ultimate fall of Nortel Networks (Jan. 14, 2009)
Nortel's future up in the air as it faces major payments (Jan. 12, 2009)
Nortel may lose NYSE listing (Dec. 11, 2008)
Nortel could cut up to 5,000 jobs next week: analysts (Nov. 5, 2008)
Nortel hits record low amid plans for cutbacks, asset sales (Sept. 17, 2008)
Nortel to close Calgary operations (May 27, 2008)
Nortel stock hits all-time low (Mar. 7, 2008)
Nortel cutting another 2,100 jobs (Feb. 27, 2008)
SEC charges 4 more former Nortel execs with fraud (Sept. 12, 2007)
Nortel to pay $1M in OSC settlement (May 22, 2007)
Regulators file charges against Dunn, other former Nortel execs (Mar. 12, 2007)
Nortel Networks cutting another 2,900 jobs (Feb. 7, 2007)
Nortel shares fall 10%, reports Q3 loss (Nov. 7, 2006)

Ottawa Headlines

Gatineau works hard to welcome immigrants
Immigration is now driving population growth in the Outaouais, and the City of Gatineau says it is working hard to welcome the flood of newcomers with open arms.
Aylmer building boom spurs growing pains Audio
A robust building boom in Aylmer is changing the character of the historic community and putting pressure on the local infrastructure.
Harper fields questions on YouTube Video
Prime Minister Stephen Harper fielded questions on hot topics ranging from legalizing marijuana and Afghanistan to aid for Africa and the deficit in his first YouTube interview Tuesday night.
Police probe death in Sandy Hill
Police were investigating a suspicious death at a Sandy Hill seniors' residence Tuesday after receiving a call to the building on Chapel Crescent, south of Mann Avenue, at 2 a.m.
Leafs still have Senators' number
The visiting Toronto Maple Leafs kept their provincial rivals in a post-Olympic funk, taking down the Ottawa Senators 4-1 at Scotiabank Place.

Canada Headlines

Charges possible in B.C. avalanche deaths
RCMP in B.C. say they have stopped searching at the site of a deadly avalanche and are now focusing on whether charges should be laid.
Quebec Liberals got construction cash: ex-minister
A one-time Quebec Liberal justice minister says his former party received generous donations from business leaders in the province's much-maligned construction sector.
2nd navy ship returns from Haiti Video
HMCS Athabaskan is back home in Halifax after an eight-week deployment in Haiti.
Harper fields questions on YouTube Video
Prime Minister Stephen Harper fielded questions on hot topics ranging from legalizing marijuana and Afghanistan to aid for Africa and the deficit in his first YouTube interview Tuesday night.
Expect N.L. deficit, premier warns
Higher oil prices will not be enough for Newfoundland and Labrador to balance the books in its upcoming budget, Premier Danny Williams says.

People who read this also read …

Top CBCNews.ca Headlines

Headlines

2nd navy ship returns from Haiti Video
HMCS Athabaskan is back home in Halifax after an eight-week deployment in Haiti.
Irish cardinal apologizes over abuse handling
Ireland's senior Catholic Church cardinal on Wednesday offered an apology for his handling of a case involving an abusive priest decades ago.
Charges possible in B.C. avalanche deaths
RCMP in B.C. say they have stopped searching at the site of a deadly avalanche and are now focusing on whether charges should be laid.
Flesh-eating disease kills man suddenly
A 40-year-old Windsor man has died after contracting flesh-eating disease.
Red River rising in North Dakota Video
People in Fargo, N.D., are scrambling to protect buildings along the Red River, hoping to avoid some of the damage that came with last year's rising waters.