Canadian Telecommunications equipment manufacturer Nortel has announced that it has filed for bankruptcy protection today to stave off its international creditors and preserve up to $2.4 billion in cash.
The firm has received the backing of the Canadian government which has already offered to give temporary short term financial aid.
In a statement to AFP, Industry Minister Tony Clement confirmed that Export Development Canada, the country's export credit agency, will provide with up to 30 million Canadian dollars (£16.5 million) in short term financing and encourage other financial institutions to open channels of communication with Nortel.
The industry minister also stressed that the company was not insolvent but was filing for "Canadian court-supervised restructuring". The Chapter 11 protection comes only a few hours before a deadline for a $107million US interest payment on a $4.5 billion debt contracted by the company.
The company, which employs 33,000 employees worldwide, has pledged to embark on a cost cutting exercise that will see the culling of 1300 jobs as the company tries to cut its phenomenal $3.4 billion loss in Q3 alone.
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