The 3rd U.S. Circuit Court of Appeals has ruled that two United Kingdom entities seeking to pursue debt claims against Nortel Networks Inc. in their home country are not governmental units and, therefore, cannot invoke the police protection exemption found in the U.S. Bankruptcy Code.
The United Kingdom Board of the Pension Protection Fund and the trustee of Nortel’s U.K. pension fund filed joint claims against Nortel, which is seeking bankruptcy protection in the United States, Canada and the U.K. The PPF and the trustee allege that Nortel’s U.K. employee pension plan is underfunded by $3.1 billion and are asking the court to order some of Nortel’s U.S. affiliates to financially support the plan. Both the trustee and the PPF initiated similar proceedings in the U.K.
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