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Judge says no – for now – to Goldman Sachs

An Ontario Superior Court judge has ruled against Goldman Sach’s most recent legal manoeuvre designed to keep the CW specialty channels separate from the rest of Canwest’s assets during the bankruptcy protection process now under way.

Justice Sarah Pepall dismissed GS’s motion to reverse the dissolution of 4414616 Canada Inc. (also known as “441”) by Canwest, which effectively transferred the assets of the specialty channels to the part of the company now in bankruptcy protection, without notifying GS. The investment bank holds only one third of the voting shares but nearly 65% of the equity in the specialty channel business.

The judge’s rationale said that lifting the stay on current court proceedings (a stay is what prevents other lawsuits from being filed during this process) would give Goldman Sachs an unfair advantage, possibly to the detriment of other stakeholders and creditors – including employees.

What does this mean in real terms? According to the Guild’s lawyer, Hugh O’Reilly, even though this ruling appears to constitute a minor setback for GS, the fact remains that the investment bank intends to continue to assert itself in the entire restructuring process. “They may not be in this from a technical or legal point of view, but from a practical standpoint they’re still very much involved,” says O’Reilly.

What’s not clear is what Goldman or the bondholders who control Canwest assets plan to do with the specialty channels. “The Guild will be going to continue to assert the interests of its members at Canwest. We’ll ensure we get all the pertinent information about what each of the parties involved in the restructuring plans to do with the specialty channels, and make it clear where our interests lie,” says Lise Lareau, national president of the Canadian Media Guild.

So for now the Canwest restructuring continues in a process overseen by Justice Pepall; it’s expected to go beyond the original late-January deadline.

For more information contact the Canadian Media Guild at info@cmg.ca or call 1-800-465-4149; in Toronto dial 416-591-5333.

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