Nortel CEO addresses decision to scrap severance pay
Published Monday, February 9, 2009 6:08PM EST
Nortel's CEO has written to employees two weeks after the firm sought bankruptcy protection.
CTV Ottawa has obtained an e-mail sent by Nortel CEO Mike Zafirovski, which addresses the fact severance pay will not be paid to laid off workers.
"This announcement came as a shock to many, and as a personal disappointment in the leadership team . . . I understand this," he wrote.
He went on to say creditors would simply not allow it and paying severance would "be putting the company at risk" of survival. He said it was "the most difficult decision anyone at the management table has ever made," adding "there are more job cuts to come."
Nortel will be back before an Ontario judge on Tuesday to argue that the court protection from creditors should be extended to May. The company is asking through its bankruptcy trustee that it be allowed to cancel the annual general meeting, usually held in May. Nortel says such a meeting with shareholders would "be a distraction to management."
Paperwork filed also says the company "is working on a detailed restructuring plan for a global reduction of its workforce." There is currently no word on the extent of staff reduction.
The company has also given notice it wants to walk away from the leases on two corporate jets and save about a million dollars a month. The bankruptcy trustee, Ernst and Young, also put forward a forecast that will have a $90-million shortfall between expenses and revenues between now and May.