Canadian Lawyer

LEGAL REPORT/INSOLVENCY Mediating a way forward Nortel is using mediation once more to try to settle its lingering financial woes. Is it the better way in insolvency cases or just as costly? BY JENNIFER BROWN Edward Sellers of Osler Harcourt & Hoskin LLP. "The U.S. judge supervising the Chapter 11 proceedings readily came to that conclusion, the judge supervising the Canadian proceedings came to that conclusion, and essentially the U.S. and Canadian courts have ordered the U.K. administrator to participate in that media- tion to see if there is a way forward to split the baby, as it were. in the Nortel case, at a time when the amount of money available was a lot less than it is now. Some estimates put credi- tor claims at twice the actual assets of the company. "After the patent portfolio was sold and another $4.5 billion popped into the mix, you're now sitting with a number close to $8 billion. There is a lot of time value to that money, Mediation was discussed twice before " are a commercial party thinking com- mercially you' " says Sellers. "If you wondering whether this time the pro- cess would be effective given the depth and complexity of the case. The war over the company's approxi- A s Nortel Networks Corp. headed into its bankruptcy mediation at the end of April, the legal community was Tay of Gowling Lafleur Henderson LLP, a heavy hitter in the bankruptcy realm who represents the former telecom giant. The first attempt to mediate a settle- ment failed after months of efforts in 2010-11. In Nortel there are multiple proceed- mately $8 billion in assets has been going on for four years and involves tens of thou- sands of pensioners, former employees, suppliers, bondholders, and a league of lawyers and accountants around the world. "More and more in restructuring situa- tions mediation is seen as an appropriate and effective tool for bringing parties to a resolution quickly. You may look at Nortel and dispute just how quickly it works, but Nortel is just so complex," says Derrick working for you rather than have the money sitting in a black box not work- ing for your benefit. I think the fact the number is appreciably higher than when other mediations were attempted and the chance at getting a material recovery has also induced the parties to be full partici- pants in the mediation." In insolvency cases, mediations help d rather have the money ings occurring in three jurisdictions — Canada, the United States, and the United Kingdom. The lack of a central forum where the issues could be tried and resolved means mediation makes sense without spending too much money on legal fees and too much time on mat- ters that require a commercial resolution, says Tay. The legal uncertainties of who is enti- tled to how much of the proceeds of a global business like Nortel really requires some form of mediated outcome, says multiple interests come together with the benefit of a confidential cloak allow- ing the parties to find a way forward to achieve a collective outcome. "One of the great things about court-ordered mediation is that while you can take a horse to water you can't make it drink, but a thirsty horse will often drink," says Sellers. "Getting the client in the sphere of the action and putting them across the table from an adversary in circumstances where they need to be civil, and they understand there are two different points of view, and someone at the head of the www.CANADIAN Lawyermag.com JUNE 2012 39 HUan tran

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