Nortel seeks bankruptcy protection

Nortel telecom seeks bankruptcy protection

Canada's once-mighty Nortel Networks Corp. (NYSE:NT) filed for bankruptcy protection in Delaware Wednesday and was set to do the same in Toronto.

The U.S. Chapter 11 filing came as $107 million in interest on debts came due, the Globe and Mail reported.

Nortel is North America's largest telecom equipment maker, but is likely to be broken up and sold to foreign rivals, sources told the newspaper after a board of directors meeting.

The company has an estimated $1 billion on hand, but $4.5-billion in long-term debt, the Canadian newspaper said. Court protection will give Nortel more leeway in selling or restructuring, the report said.

In 2000, Nortel had 95,000 employees and its shares were worth $1,231, but as of Tuesday, there were 26,000 staff and shares closed at 38.5 cents on the Toronto Stock Exchange, the Globe and Mail said.

The 114-year-old company was founded in Toronto as the Northern Electric Manufacturing Co.