Sorry. I'll slow down.
All of these contracts were conveniently rendered null and void when Nortel filed for creditor protection under the federal CCAA legislation. To our even further surprise, we were now to be ranked equal to unsecured creditors and could only hope to expect pennies on the dollar in the settlement that could easily be more than a year away. We also discovered that severance and pension issues are only protected under provincial jurisdiction. But under federal CCAA protection, all provincial requirements are no longer honoured.
At the time the company filed for creditor protection, it was sitting with over $2.5 billion of cash on its books. It boggled all our minds to understand how creditor protection filing was needed with that much cash available. We were, only weeks before, assured by the CEO that we had liquidity well into Q4 of 2009.
This is what we need to fix. CCAA and BIA legislation needs to be revised to give super-priority to current and former employees' claims in these circumstances. Employees and pensioners have no recourse with a bankrupt company and therefore cannot be treated as a commercial creditor. Employees and pensioners need to be acknowledged as a unique group. Please ensure CCAA cannot be used, as it has in this case, to circumvent provincial employment standard laws and to hide from employee financial obligations for severance and pension top-up requirements. Please reference the Mike Zafirovski e-mail I've provided in my brief from 1/30/09. It clearly states it was key to Nortel's liquidity going forward that severance obligations be waived through the creditor protection process.
Unfortunately, despite the clear focus on liquidity and finding a way through its debt minefield, the company is now paying $45 million in executive bonuses and paying employee incentive bonuses of an estimated $68 million internally. This does not sound to us like a company that is trying to find a way out of financial straits.
This path is an all-too-easy way for employers to unload employee obligations onto the Canadian government and its taxpayers. This path pushed an expected 1,100 employees onto unemployment insurance at an estimated cost to us as taxpayers of $20 million—a loss of $34 million in income taxes we would have paid on the severance.
All told, by skilful execution of this legal plan, Nortel avoids paying an estimated $125 million in severance obligations in Canada, $1.25 billion in pension obligations, $200 million in post-retirement health and other benefits. They also got to take out of the pockets of all Canadians about $54 million without a single shot being fired. Wow, this is a pretty sweet deal for them.
This was all accomplished using the loopholes that exist in this aging CCAA and BIA legislation and with the help of $5.5 million per month of lawyers. This needs to be fixed, and fixed now, as it has been and will be used by many more companies that will go into bankruptcy in the future.
We, as the severed employees of Nortel, want to ensure this indignity is not propagated onto any other hardworking Canadian employee in the future. We want to ensure the laws are amended and ensure that employers such as Nortel are forced to honour their employee obligations and do the moral and ethical thing for the employees. Nortel and its executives need to be made accountable to this case, and before any bonuses are paid out, they need to be made to honour their severance and pension commitments.
Please refer to the additional briefs we have provided on this matter, as I could not cover all the issues in this short presentation. We are more than happy to work with any levels of government to rectify this situation for future generations.
In closing, I would like to thank everyone for their time and attention here. Once again, I ask our government to begin immediate work on fixing the federal CCAA and BIA laws to protect the innocent Canadian workers going forward.
I will close now and make myself available to answer any questions you may have.
Thank you.