The NDP plans to introduce a motion Friday to amend bankruptcy laws to make sure pensioners and laid off employees get top priority on the list of creditors.
The move is welcome news for former employees of Nortel who are seething mad and demanding answers into how the financially troubled company can afford massive bonuses to executives while cutting pensions and refusing severance to a thousand laid-off workers.
They also want Parliament to make changes to Canada's bankruptcy laws to ensure that fired employees get better protection over other unsecured creditors.
Former employees jammed a Commons committee room Thursday and heard Nortel CEO Mike Zafirovski defend the bonuses before a panel of MP's.
Paula Klein, who represents Nortel's laid-off workers, said Friday the Canadian taxpayers are essentially bankrolling the gold-plated bonuses.
Appearing on CTV's Canada AM Klein explained said that because Nortel is "not paying severance that's forcing all those people to go on employment insurance" which she estimates is costing taxpayers "about $20 million" in EI premiums.
Klein, who was fired in December after more than 20 years with Nortel, said that Ottawa is also losing out on "about $34 million in lost tax revenues."
She and other former Nortel employees don't buy Nortel CEO Mike Zafirovski's explanation about why he can hand out $45 million in bonuses last year yet refuse severance.
Zafirovski said he had no choice, that Nortel's lawyers told him the bankruptcy court would never have approved millions of dollars in severance payments to laid-off workers.
Zafirovski also said the bonuses were crucial to keep top executives and keep the company afloat.
"In this company's situation and in a highly competitive industry, retaining key employees and preventing unwanted levels of attrition is critical to preserve value and to maximize assets for the company's stakeholder's," he said.
Some financial analysts who have followed Nortel accuse the company of going into bankruptcy protection to avoid paying severance, even thought it had billions in cash on hand.
Changes to bankruptcy laws
Former employees accuse Nortel of hiding behind bankruptcy laws to maximize executive pay and want Ottawa to change the laws.
Don Sproule, who represents 17,500 Nortel retirees and pensioners, said Friday on Canada AM the bigger problem is the current makeup of those laws.
"The real issue for us was not so much to hear Mike Z. talk it was really to talk to our parliamentarians about changing the laws that have put the payments to the severed employees in jeopardy right now," Sproule said.
Sproule said that Nortel's pensions and severance don't have preference compared to the company's creditors, and many pensioners were caught flat-footed by the bankruptcy.
Nortel filed for bankruptcy protection from creditors in January and has been trying to restructure ever since.
The company was once Canada's telecom giant. Before the tech bubble burst, Nortel employed 90,000 people worldwide and its shares traded for more than $120.
Its shares are now trading for around 18 cents.
With files from The Canadian Press and a report by CTV's Rosemary Thompson
