Third Round of Mediation Talks Fail for Nortel Networks
Monday, January, 28, 2013
Canadian mediation talks between the now-defunct Nortel Networks, its creditors and former employees have failed to reach mutual agreement for all parties involved. The former telecommunications giant is having international struggles siphoning off its remaining money after bankruptcy court dissolved most of its assets. The particular dispute at present concerns approximately $9 billion in cash that is to be divided among creditors and retirees on several continents, including North America (Canadian and U.S. entities), Europe and the U.K. According to claims made by the European entities involved, the retired employees on the U.S. and Canadian side of the firm have seen a much better retirement payout than the European employees of the company have seen, and it is this lack of balance and fairness that has so many European stakeholders concerned about continuing mediation talks.
As a whole, the groups involved in the dispute have not able to reach an agreement concerning who should get which slice of the shrinking pie that is comprised of Nortel Networks’ remaining assets. While creditors are asking for more than $36 billion in claims in Canada alone, the bankruptcy administrators are demanding that $2.67 billion is necessary to pay retirees what they are owed in pensions.
Don Sproule, who serves as president of the Nortel Retirees, said in a statement to a Toronto newspaper, “For four years, our retirees and former employees have been fighting for a fair share of the pie. We have been treated as pawns in this game by vulture bond funds.” It is a battle that has been on-going with much at stake, but according to Sproule, it is not something they are ready to give up on fighting for. “We will continue the battle,” said Sproule.
The mediator working on the case has been Warren K. Winkler, the chief justice of Ontario. In an emailed statement this week, he wrote that he “has concluded that further efforts at mediation are no longer worthwhile.”
The decision to attempt mediation before litigation was due to the fear of conflicting rulings by different judges throughout Canada, the U.K., the U.S., and France. However, this is the third mediation effort that has failed, so the cases are likely to enter into litigation soon. Now, courts will have to sift through thousands of financial transfers made to determine if money has been siphoned away from the European entities by Nortel’s U.S. and Canadian entities, as is being claimed.