Nortel Fights to Pay Executive Bonuses after filing for Bankruptcy
Posted on Mar 20, 2009 11:48am PDT
Nortel Networks Corp., once known as North America's largest telephone-equipment maker, just won approval to pay eight of its senior executives their annual bonuses. According to reports, the company is currently trying to reorganize after filing for bankruptcy and had wanted to pay out $7.3 million in bonuses to its top leaders.
While approval was granted to pay the $7.3 million in bonuses, the company is still trying to fight to pay 92 other managers approximately $23 million in bonuses. The company also would like to pay 880 other workers bonuses, which would cost an additional $22 million. Under this plan, the company hopes to keep its workforce in place as it fears that workers will leave.
Nortel attorney, James Bromley, said that paying upper management more than workers is important, "because of the high level of expertise of these individuals... we believe it is appropriate for the circumstances."
In January, the Toronto-based technology telephone company filed for bankruptcy in both the U.S. and Canada after losing $7 billion since the year 2005. Even though the company is fighting to pay executives their bonuses, it still plans to lay off 5,000 workers this year in an attempt to reorganize its struggling business into a smaller company. Bromley claims that the $7.3 million is an estimate of how much the eight executives would make if the company were to achieve its' revenue goals, including its plan for reorganization. $5 million would be shared by five executives in the U.S. and the other $3 million would be distributed amongst three executives in Canada.
When Nortel filed for
Chapter 11 Bankruptcy, paperwork indicated that the company had assets of $11.6 billion and a debt of $11.8 billion as of September 30, 2008.
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