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Telecom Company Nortel Files For Chapter 11 Bankruptcy Protection

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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Our Comments

The potential demise of the official Network Infrastructure Partner for the London 2012 Olympic Games could provide with a glimmer of hope for other players in the market - Alcatel-Lucent, Cisco, Ericsson, Nokia, Juniper Networks - as they all get ready to fill Nortel's shoes.

Related Links

Canadian government to aid Nortel after bankruptcy filing (opens in new tab)

(AFP)

Nortel files for bankruptcy protection (opens in new tab)

(Marketwatch)

Chapter 11 for Nortel (opens in new tab)

(Windsorstar)

Nortel bonds capable of substantial recovery: RBC (opens in new tab)

(Nationalpost)

Another jolt for Indian IT firms (opens in new tab)

(Business Standard)

Bankruptcy filing was in part to preserve $2.4B in cash, Nortel exec says (opens in new tab)

(Computerworld)

Nortel Files for Bankruptcy Protection (opens in new tab)

(Thewhir)

UPDATE: Flextronics' Shares Entangled In Nortel's Bankruptcy

(CNN)

Nortel May Rely on Cash, Loans From Units While in Bankruptcy (opens in new tab)

(Bloomberg)

Désiré Athow
Désiré Athow

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at ITProPortal.com where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.