Toronto-based Nortel is reeling from the sudden drop in demand for its voice-only telecom-network equipment and has been trying to cut costs and sell assets to survive the downturn. It is expected to file for protection from creditors in Canada, as well.
Nortel was facing a $107 million bond interest payment this week. The company owes bondholders more than $3.8 billion, according to court filings.
In December, the company had received notice from the New York Stock Exchange that it faced delisting if it couldn't bring its share price above the required $1 minimum in the next six months. It was last trading at 32 cents a share.
Nortel's shares plunged last year as customers reduced spending amid the economic downturn.
The company also filed for protection under Chapter 15 of the U.S. Bankruptcy Code. Chapter 15, added to the U.S. Bankruptcy Code in 2005, opens the door for a company or court-appointed administrator to seek a U.S. bankruptcy court's recognition of a foreign bankruptcy case as the main, or controlling proceeding.
WSJ.com
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