Nortel Files for Bankruptcy

January 14th, 2009 at 12:00 am
 


nortel

As a result of the global economic crisis, Canadian telecommunications equipment maker Nortel Networks is seeking protection under Companies’ Creditors Arrangement Act ("CCAA") in Canada and voluntary petitions in the United States under Chapter 11 of the U.S. Bankruptcy Code.  In other words, they’re in bad shape. 

Nortel made this decision with the unanimous authorization of its Board of Directors 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. 

"Nortel must be put on a sound financial footing once and for all," said Nortel President and CEO Mike Zafirovski.  "These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.  I am confident that the actions we’re announcing today will be the fastest, most effective means to translate our improved operational efficiency, double-digit productivity, focused R&D and technology leadership into long-term success. I want to reaffirm Nortel’s dedication to delivering world-class solutions and services to customers."

There have yet to be any announcement of lay offs.  However as this restructuring goes, soon comes reorganizing then streamlining their operations. Basically, there will be lay-offs regardless if Nortel claims that operations are expected to go on without interruption.

On the bright side, this decision from Nortel Networks in Canada will not be affecting Nortel’s affiliates in Asia, the Caribean, South America, and Nortel Government Solutions.