Vance given peacemaker role for O&Y

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NEW YORK - Cyrus Vance, fresh from his unsuccessful attempt to stop the war in Bosnia, was chosen yesterday to bring peace to another strife-ridden part of the world, the US commercial property market, writes Larry Black.

At the request of a US bankruptcy court, Mr Vance, a former US Secretary of State, will mediate between warring factions in the former Olympia & York property empire. Tensions have been mounting for several months between the court-appointed administrator of O&Y's Canadian parent and creditors of O&Y's US arm, who are owed some dollars 6bn.

O&Y (USA) is the only part of the former empire to have escaped formal bankruptcy, although the company, 80 per cent owned by the Toronto-based O&Y Developments, has stopped most debt payments. Robert Lowe, named by a Canadian court to liquidate O&Y's assets, has insisted on sovereignty over the US subsidiary, but the US creditors, fearing any concessions on their part will only benefit the Canadian parent, have threatened to plunge the US assets into bankruptcy.

Citicorp, one of the senior parties to the negotiations, last week asked the US court to give the O&Y (USA) president, John Zucotti, control over the talks. But the court insisted that two sides come to a mutually acceptable settlement of the dispute - ideally without firearms.