Newspaper article The Canadian Press
Failed Nortel Mediation Signals Need for Better Bankruptcy Laws in Canada: CAW
Nortel insolvency shows need for new laws: CAW
TORONTO - The complex legal battle over $9 billion in residual assets of former technology giant Nortel Networks underlines the inadequacy of Canada's bankruptcy laws, says the head of the Canadian Auto Workers.
Union president Ken Lewenza says Ottawa needs to intervene to ensure that former workers, disabled employees and pensioners at the now-defunct equipment maker can get their fair share of the assets, which are being claimed by more than 100 parties including bondholders, trade creditors and governments.
"It's a case that the government should look at and implement legislative changes to make sure that these things never happen again," Lewenza said Friday.
Efforts to divide up Nortel's creditor claims abruptly ended Thursday when Ontario Chief Justice Warren Winkler, who was court-appointed to lead the proceedings, concluded that there was no sign of a resolution in sight.
"The chief justice has concluded that further efforts at mediation are no longer worthwhile," according to a spokesman for the talks.
By this point, the mediation, which was only supposed to be a week long, had already been extended twice by Winkler. This was the third attempt at a resolution.
Lewenza blames the deadlock on a group of Nortel bondholders who want the full value of their bonds, plus interest, which amounts to $4.5 billion, even though he says they only paid 20 cents on the dollar for them.
He says there has been little room for negotiation, especially for his members, some of whom have lost their pensions and life savings when the Ottawa-based firm went belly up. CAW represents about 850 pensioners and former disability workers.
"Normally, mediation is a good tool. Nobody leaves totally satisfied, nobody leaves with jubilation that they all got what they wanted," said Lewenza.
"The reality is that if you go in asking for the full basket, then whether it is a week, or whether it is 10 weeks or 12 weeks of mediation, it won't matter if the attitude doesn't change."
According to legal documents, U.S. law firm Cleary Gottlieb Steen & Hamilton LLP, who represented Nortel in the mediation, filed $1.25 million in fees in November alone. One media outlet reported that the firm has been billed for $755-million worldwide since the negotiations begun. …