Winn-Dixie Judge Hints at Mediation; Funk Willing to Bring in Third Party to Settle Issues between Company, Creditors

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Byline: MARK BASCH

U.S. Bankruptcy Judge Jerry Funk Thursday approved an extension of the deadline for Winn-Dixie Stores Inc. to file its Chapter 11 reorganization plan, but hinted he may appoint a mediator if the company can't resolve its remaining issue with its creditors by the end of June.

The issue holding up completion of the reorganization plan is how Winn-Dixie and its 23 subsidiaries that filed for Chapter 11 reorganization will pay off their creditors. Either all 24 parties will be consolidated into one and then figure out payments, or each of the 24 will pay off their own creditors individually.

Since some creditors will benefit from consolidation and others will benefit from individual payments, Winn-Dixie has had difficulty reaching a consensus on the issue. Stephen Busey, an attorney for Winn-Dixie, said it is in everyone's best interest to reach a consensus because some creditors would file litigation if they're not happy with their payments.

"We could spend about a year or two litigating that issue," Busey.

Funk asked attorneys for Winn-Dixie and its creditors if they had considered retaining a mediator to resolve it and they said they hadn't.

"We believe this is a process that is starting to move in the right direction," said Michael Comerford, an attorney for the committee of unsecured creditors. …