Networks Corp. is seeking a judge’s permission to cut off medical and disability benefits to more than 4,000 former U.S. employees.

Nortel pensioners

Montreal Gazette – Nortel, based in Toronto, has asked a bankruptcy judge in Delaware overseeing the case to let it stop the benefits, which are costing the company $2 million U.S. a month, at the end of August.

A hearing is scheduled for July 16. “Providing these benefits is a significant financial burden that does not provide any concomitant benefits to the debtor’s estates,” Nortel said in court papers. “The individuals currently receiving the benefits of such expenditures are not providing services to the debtors.”

Nortel has agreed to pay benefits to 19,800 retired and disabled Canadian workers to the end of the year by creating a $57-million fund. Currently, 4,019 retirees and family members receive medical benefits, while 280 individuals get long-term disability benefits. Nortel said it negotiated an agreement with UnitedHealthcare Insurance for provide medical coverage to the retirees if want to buy it.  See Claims of sick Nortel staff denied