Nortel Networks Inc., the telecommunications company beingliquidated in bankruptcy, won court permission to hire a mediatorto try to resolve a dispute over how to wind down its pensionplan.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware,approved a 60-day mediation period, during which Nortel, once thelargest telephone equipment maker in North America, must negotiatewith two committees representing retirees and workers who receivedisability payments.

Last month, Gross ordered Nortel into mediation with itsEuropean units in a larger battle over how to split more than $7billion the U.S. and Canadian units have collected by sellingassets, including 6,000 patents to a group led by Apple Inc. andMicrosoft Corp.

The dispute over pension and disability payments will probablybe much easier to resolve and shouldn't interfere with themediation between the European and U.S. units, said Albert Togut,the lawyer for the committee of Nortel retirees.

“The likelihood is that this is going to be done before the'Queen Mother' of all mediations,” Togut said in court.

Nortel has spent about $20 million on retiree benefits in thepast two years, company bankruptcy attorney James Bromley toldGross.

The company will eventually need to cancel the pension plan andthe program under which disability payments are made to formeremployees, Lisa G. Beckerman, an attorney for a committee ofunsecured creditors, told Gross.

“We are going to have the termination of these plans because atsome point there won't be a company,” she said.

Since filing for bankruptcy in 2009, Nortel, based inMississauga, Ontario, has sold all of its major businesses and ispreparing a plan to divide the proceeds among creditors.

The case is Nortel Networks Inc., 09-10138, U.S. BankruptcyCourt, District of Delaware (Wilmington).

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