Canada's Nortel Networks has filed for bankruptcy in Delaware under Chapter 11 and Chapter 15 guidelines. It has not filed for bankruptcy yet in Canada, but The Wall Street Journal reports that this is expected to happen as well.
The long-troubled vendor appeared to enjoy a brief boost in its financial health early last year, but by last fall, Nortel was cutting jobs and attempting to sell its Metro Ethernet division after carrier capex began to dry up. Toward the end of the year, the Toronto-based company was warned of a possible de-listing from the New York Stock Exchange, and published reports suggested the firm was considering a bankruptcy filing, among other options, as it faced imminent bond interest payments. According to the WSJ, Nortel faced one such payment of about $107 million this week, and owes its bondholders more than $3.8 billion in total.
The Chapter 15 filing enables a company "to seek a U.S. bankruptcy court's recognition of a foreign bankruptcy case as the main, or controlling proceeding," the WSJ reports.
It is unclear whether or not an earlier sale of the Ethernet group would have spared Nortel the filing. The group has been on the block for several months, and several companies have been mentioned as being potential buyers. Published reports, unconfirmed by Nortel, have suggested bids anywhere between $30 million and $400 million for the unit. Just last week's Nortel had captured some attention at CES 2009 for its Web Alive software, which companies can use to build virtual worlds for e-commerce and other applications.
- The Wall Street Journal reports
Last month, Nortel appeared likely to put off bankruptcy
Nortel reported a $3.4 billion loss in November
Nortel in September was looking at the Ethernet unit sale