There's a potential settlement for about 20,000 Nortel pensioners, long-term disability workers and laid off workers who were never paid any severance.

A possible deal is back in the legal system after the case went before a Toronto judge Tuesday morning.

A group of lawyers told the judge they have a new deal that would replace the one struck down by the judge last Friday.

In that decision, the judge said he was opposed to one clause that would allow Nortel workers to move up in the ranking of creditors, if -- and only if -- the federal government changed the Bankruptcy Act.

The reworked package will go before the judge for approval Wednesday at 10 a.m.

Susan Philpott, a lawyer at the law firm Koskie Minsky, represents the interests of the workers who support the deal.

"The entire issue could be (and hopefully will be) resolved tomorrow. There is no leeway to re-negotiate the deal, the vast majority of which the judge found to be fair and reasonable," she told CTV Ottawa in an emailed statement.

LTD workers don't like the deal because it would limit their right to sue former Nortel executives. They feel it gives up too much when they face years of medical costs and no chance to land a job.

Many other Nortel workers hoped the federal government would change the Bankruptcy Act.

However, Philpot says the only change made in the deal is the removal of the clause the judge did not like, which means if the Act were changed, it likely won't help Nortel workers.

Joel Rochon, the lawyer hired by LTD workers who are opposed to the deal, says negotiations among lawyers went on all weekend and he was not part of those talks.

"We indicated to Justice Morawetz that we would be objecting to this change and the overall deal at the hearing tomorrow," he said in an emailed statement to CTV Ottawa.

"This has been another disappointing day for the Nortel LTD employees. Today's developments serve to underscore the urgent need for Parliament to intervene to prevent this travesty from coming to fruition."

The deal provides pension support until the end of September. LTD workers would get benefits until the end of 2010, and laid off workers would get up to $3,000 each as partial payment on severance.