Nortel files for Chapter 11 bankruptcy protection

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Toronto—Financially troubled Nortel Networks filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code and the Companies’ Creditors Arrangement Act in Canada.

The decision was made with unanimous support of Nortel’s board and was undertaken to help the company deal with its massive debt burden.

“Nortel must be put on a sound financial footing once and for all,” said Mike Zafirovski, Nortel’s president-CEO. “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 know it ought to be.”

Nortel has worked to regain its position as a telecom leader since the technology crash in the earlier part of the decade, but increased competition and the recent credit crisis have hampered its efforts.

Nortel said its day-to-day operations are expected to continue without interruption. It was unclear how the filing would affect staffing levels.

—Kate Maddox

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