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Nortel settlement talks extended a second time

Settlement talks to divide up the remaining $ 9 billion (U.S.) in assets of defunct Nortel Networks Corp. have been extended for a second time, raising hopes for a possible deal.

In a statement late Tuesday, Ontario’s Chief Justice Warren Winkler, who was appointed by bankruptcy judges in Canada and the United States to broker a deal among many creditors, said mediation has been extended but no new deadline set.

From late summer into fall, Winkler held separate meetings with the different creditor groups, who range from bondholders to Nortel’s retirees and disabled former employees to governments.

Last week, the parties, which included 100 lawyers and financial advisers, arrived for a formal mediation session in Toronto, and Winkler extended the deadline until noon Tuesday.

Two previous attempts at mediation among Nortel’s creditors, who span all continents except Antarctica, failed.

But Winkler’s stature and reputation for being able to bring parties together, having brokered deals in other difficult disputes including restructuring Air Canada in 2009, brought renewed hope.

The task is to find agreement among all the parties. The proceeds for the selloff of Nortel’s assets including patent sales totaled about $ 9 billion. That pales in comparison to the claims from creditors, exceeding more than $ 20 billion (U.S.), and by some estimates could reach as much as $ 36 billion (U.S.), according to Bloomberg.

Winklermade it clear last April when mediation formally began, that it was the only and best option for a resolution, given that the Nortel insolvency involves companies in 20 countries.

Even though court proceedings are under way in the United Kingdom, the United States and Canada, Winkler said: “No single court has ultimate authority over the subject matter of this mediation.”

He warned there was no realistic “litigation option,” and even if a judgment were rendered, it would be entirely possible that it would have no legal effect beyond that jurisdiction.

If the parties chose to go down the road of litigation, Winkler said any Nortel assets now available would be depleted, and the case would be tied up for years. “This would be a catastrophic outcome for some, and unsatisfactory for most, of those affected by this case,” he said in his opening remarks.

At one time, Nortel Networks was touted as a Canadian success story, a stock market darling and the highest-valued company trading on Toronto exchange. At its peak, it traded at $ 124.50 in 2000, before eventually falling to penny-stock status.

thestar.com – Business

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