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Nortel, Former Employees Fight Over Severance

Several groups of employees are trying to get severance payments and employee benefits such as dental coverage that were cut off when Nortel got court protection from creditors.

TORONTO (CP) -- Lawyers for Nortel Networks Corp. and former employees of the fallen technology giant are facing off in court today.

Several groups of employees are trying to get severance payments and employee benefits such as dental coverage that were cut off when Nortel got court protection from creditors.

The court-appointed monitor has said one law firm, and only one law firm, should be recognized as the official representative for all former employees to minimize the drain on Nortel's resources.

But at least three other groups have argued their needs may be at odds with other former employees and they want their own lawyers to speak for them in court.

Mark Zigler, a lawyer for the firm Koskie Minskie, told the court it made no sense to have more than one group of lawyers representing all the former employees.

"This is the best way to handle the claims of tens of thousands of people or even hundreds of people," Zigler said.

He added that the duplication of effort of having more than one firm would fragment the process and provide no economies of scale and ultimately harm the people that they are trying to help.

Janice Payne, a lawyer for former employees who had lost their jobs recently, disagreed because some of the issues they have -- such as unpaid severance and health benefits they aren't getting -- are fundamentally at odds with the needs of the other groups of employees.

And she said their needs could be overwhelmed by the much-larger group, who are primarily interested in saving pension benefits.

She also said that it was troubling that Koskie Minskie's appointment was being supported by Nortel, which wanted to have a single firm representing employees in this process.

In motions filed before the hearing, Nortel's lawyer argued that under bankruptcy protection a company isn't obliged to pay severance or benefits to its former employees.

The iconic Canadian telecom technology company, which originated as part of Bell Canada and has a history stretching back a century, has suffered multiple blows in recent years and has been operating under court protection since January.

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