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Handling project management issues for a proprietary ownership conflict

Project management issues are common but some are worse than others. When a system configuration team refuses to hand over code find out if there's anything the project manager can do to resolve the issue.

You are a project manager on an on-going project. Your company just merged with a large, high profile corporation. Since the merger, the systems configuration team has refused to turn over code for the project because they believe it to be a conflict of proprietary ownership. The project has not been "killed" or gone through change management for restructuring. What are the sequential actions that should be taken to expedite the resolution of this issue?
I'd like to know more about the conflict. I am certainly not a lawyer but I would have hoped that consultants or other internal players on the project evaluated this risk from the beginning. If there are legitimate legal issues, then I would recommend a mediator or arbitrator over a lawsuit. If nothing else, those options will allow for a quicker resolution.

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