Nortel on life support

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Nortel on life support

Alex Scroxton

Nortel may shortly become the first vendor to fall victim to the credit crunch amid reports that it could file for bankruptcy protection later on Wednesday.

A report in Canada's Globe and Mail said that troubled Nortel is due to make a $107m interest payment to its creditors by the end of the week, according to sources close to the business.

Despite losing over $3bn during Q3 last year, Nortel still has sufficient cash to make the payment, but seeking protection would allow it to keep the money to fund its operations while it divests and restructures. The company's board met in emergency session last night to discuss the possibility, said the Globe.

Last month Nortel denied it had sought legal advice over the possibility of filing for bankruptcy.

The likely fate of filing for court protection would be the wholesale dismantling of Nortel's business. Last week Israeli application delivery specialist Radware was linked to its metro Ethernet network business, which Nortel elected to sell off in autumn 2008, and after being rebuffed last year there could be further interest from Huawei.

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