Bankrupt Nortel Networks has received yet another in a long line of reprieves from Canada’s federal government.
The company on Wednesday said it will remain under creditor protection – meaning its debt holders can’t collect on monies owed – until Feb. 28, 2011. The decision marks the latest in a series of such extensions since Nortel filed for Chapter 11 bankruptcy in January 2009.
Since going under, Nortel has sold its various assets – including the optical, Ethernet and wireless divisions – at rock-bottom auction prices to rivals. Most recently, Nortel shed its huge campus in Ottawa and offloaded its business unit in Turkey.
Nortel says it’s collecting the money from the sales to pay off creditors but shareholders won’t benefit from any of the activity. Pensioners and retirees won’t either. Many in Canada alone are slated to lose their company-funded benefits at the end of this year. In the meantime, a number of Nortel creditors have hired a high-powered lawyer to try and squeeze some money out of the company.
This latest creditor protection-stay likely won’t be the last.
