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Nortel News: Rethinking Bay Networks Acquisition, Delisting Threat

There is considerable discussion on US Bankruptcy Law Chpt 7 reorganization but NT Holding Company that is the listed reporting issuer has several operating units. One of the largest subsidiaries is the Canadian unit that would not fall under US bankruptcy law unless it was 100% owned by the US subsidiary - which would be subject to Chpt 11 filing if NT choose that route. The problem with Chpt 7 for the US subsidiary would be that NT would need to argue that it had no other choice. One theory that continues to be miscommunicated is pension liability. The Canadian pension plan is governed under Ontario (Canada) pension law The Ontario government announced that it will enact pension law changes in May-2009 that will be retroactive to Sept-30-08. The new change would defer pension liabilities from 5 years to 10 years. The US pension industry is in similar reform mode to mitigate the recent credit crisis fall-out in market valuations and credit facilities. The SEC had suspended accounting rules that would otherwise require "mark-to-market" of securities portfolios that have been hammered by the 40%-50% drop in stocks. Finally, there are many companies with a fraction of NT's sales and simple business models that have materially higher valuations. What NT has is the ability to cut costs further to survive. What it needs is manage will to act swiftly to reduce (sell-off) its business model to reorganize into less competitive and higher profit margin product/service markets while cutting costs.