Former Nortel CEO John Roth is demanding $1 billion from the company to fund his indemnity against potential shareholder lawsuits.
Roth, who retired as CEO at the height of the tech boom in 2001, filed claims earlier this month in a bid to protect his assets against class action lawsuits, which have been on hold due to Nortel's bankruptcy proceedings.
The lawsuits, filed four years ago, allege Roth and other executives encouraged Nortel employees to continue to invest in the company's 401(k) plan despite its rapidly deteriorating state.
One suit claims that the defendants were “intimately familiar with the company's ailing finances” in the preceding five years but still helped and encouraged plan participants to invest in the company “despite the unsuitable nature of such an investment.”
Roth departed Nortel in 2001 with $135 million in stock options, bonuses and retirement benefits.
After his retirement the company was hit by the collapse of tech stocks, a series of accounting scandals and the emergence of low-priced Chinese vendors. Since filing for bankruptcy 12 months ago it has sold off its wireless, enterprise and optical assets.
Sacked and retired Nortel workers who are owed unpaid pension funds and severance packages wages are considered unsecured creditors and are at the back of the line to receive payouts from bankruptcy proceedings.