Lehman Brothers Holdings’ European unit and Nortel Networks Corp. are challenging the U.K. Pensions Regulator in court over whether they must pay as much as a combined £2.25 billion ($3.55 billion).
The Pensions Regulator issued a financial support direction against Toronto-based Nortel in July seeking as much as £2.1 billion pounds for the underfunding of its C$2.5 billion (US$2.42 billion) plan. The panel issued a similar order this month against Lehman Brothers and its affiliates seeking funds to cover a deficit of more than £148 million in the former investment bank’s $800 million retirement plan.
Lehman Brothers International Europe and Nortel are jointly challenging the regulator’s claims in a London court, saying they shouldn’t be required to pay the deficits while they are in administration or bankruptcy protection. Judge Kim Lewison ruled at the hearing on Wednesday that the parent company and Lehman Brothers Asset Management (Europe) can also join the challenge to protect their specific interests.
Lehman doesn’t want to have to pay the European unit’s debts, its lawyer, Barry Isaacs, said at the hearing.
David Hannant, a spokesman for the regulator, declined to comment because the case is ongoing.
Lehman Brothers filed the largest bankruptcy in U.S. history with its Chapter 11 filing in September 2008, and its European unit is liquidating in London. Nortel and affiliates filed for Chapter 11 bankruptcy protection in the U.S. as well as bankruptcy filings in Canada and London in January 2009.
A U.S. Bankruptcy Court judge in Delaware ruled last month that efforts by the U.K. regulator to force Nortel to contribute to its retirement plan violate the so-called automatic stay in the case, and halted the request.