Creditors of Nortel Networks Corp. (NRTLQ:US), the defunct telecommunications company, will continue trying to negotiate a way to split $9 billion in cash, the mediator overseeing talks said.
Mediator Warren K. Winkler, the chief justice of Ontario, said in an e-mailed statement today that talks which began on Jan. 14 will continue for an undetermined amount of time. Winkler, who was appointed by the Canadian and U.S. judges overseeing the biggest parts of Nortel’s bankruptcy, had summoned participants to the Hilton hotel in downtown Toronto for a week of talks that began Jan. 14.
While participants were no longer at the hotel, talks continued today, Peter Rehak, a spokesman for Winkler, said in an interview. At the end of the day Winkler issued a two- sentence statement saying talks would be extended without giving a new end date.
The mediation involves Nortel’s Canadian and U.S. entities and their creditors, who have been opposed by the company’s European units and their creditors, including retirees seeking to retain pensions.
The groups have been fighting over a shrinking pile of cash that won’t cover all of the debt owed by Nortel and its units. Creditors have presented more than $36 billion in claims in Canada, according to a status report filed in a Toronto court in October.
Pension administrators in the U.K. are demanding $2.67 billion from Nortel’s main U.S. unit, claiming the money is needed to fund payments to about 38,000 retirees, according to court documents.
The talks were designed to prevent court battles in Canada, the U.S., the U.K. and France, where conflicting rulings by different judges would be “a catastrophic outcome,” Winkler wrote in April, when the current mediation started. The first two mediation efforts failed.
Nortel, based in Mississauga, Ontario, filed for bankruptcy in Toronto, Delaware, the U.K. and France in 2009, with various units under the control of separate teams of lawyers and under the jurisdiction of different courts.
The European units were placed under the control of court- appointed administrators. In 2011, those administrators filed a claim in the U.S. bankruptcy court, alleging that the parent company and the U.S. unit had siphoned money away from the European units for years, leaving them unable to pay pensioners and other creditors.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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