Nortel files for bankruptcy protection in Canada, US and Europe

14 January 2009

Nortel Networks Corporation, once the largest company in Canada, today  announced that Nortel Networks Limited and certain of its other Canadian subsidiaries has sought bankruptcy protection in Canada, the US and Europe.

The company said it has filed for creditor protection under the Companies' Creditors Arrangement Act in Canada and under Chapter 11 for some of its US subsidiaries, including Nortel Networks Inc. and Nortel Networks Capital Corporation while some of its EMEA subsidiaries are expected to make consequential filings in Europe.

Nortel, however, assures customers that its day-to-day operations and services will continue without interruption. ''Nortel remains 100 per cent focused on serving customers worldwide through continued R&D investments and support of its product portfolio to fulfill customer needs,'' the company said in a release.

Nortel said the company's board unanimously made the decision after thorough consultation with its advisors and extensive consideration of all other alternatives. ''This process will allow Nortel to deal decisively with its cost and debt burden, to effectively restructure its operations and to narrow its strategic focus in an effective and timely manner,'' it said. 

Nortel said while the company commenced a process to turn around in late 2005, and made important progress on a number of fronts, the global financial crisis and recession have compounded Nortel's financial challenges and directly impacted its ability to complete this transformation.

Nortel said it has $2.4 billion in cash to preserve its liquidity and fund operations during the restructuring process.