Nortel Networks filing for Chapter 11 bankruptcy
Nortel Networks filing for Chapter 11 bankruptcy protection on Wednesday came as no surprise to partners and industry analysts, who said the Toronto-based vendor will come out of bankruptcy a more profitable and viable company.
On Wednesday, Nortel sought protection from its creditors, filing for Chapter 11 bankruptcy protection in the U.S. and under the Companies’ Creditors Arrangement Act (CCAA) in Canada. The move came as Nortel faced paying a $107 million bond interest payment this week on a $3.8 billion bond debt.
The filing comes as Nortel struggles to find its footing in a slumping economy. In November 2008, Nortel posted $3.4 billion in quarterly losses, its biggest dip in seven years. In response to weak sales and mounting debt, Nortel slashed 1,300 jobs and froze salaries and hiring in its bid to restructure and cut costs of roughly $400 million. Nortel has faced a downward spiral since 2005, when president and CEO Mike Zafirovski took the helm. Zafirovski was charged with turning around the struggling company and since taking over as chief executive has cut the work force by roughly 18 percent and faced losses of more than $4.5 billion.
Source: Will Nortel Emerge Stronger After Bankruptcy?
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