Nortel, a Year Later: How The Liquidation Was Done

When Nortel Networks Corp. sought court protection from its creditors last January, its chief executive officer, Mike Zafirovski, promised creditors and employees that the telecommunications company would stanch its debt wounds and re-emerge in fighting form, The Globe and Mail reported in an analysis. But the pledge, like Mr. Zafirovski, was gone by summer. Replacing the dream was a grim calculation by Nortel's advisers and presiding courts in Canada, the United States and Europe that the company could not survive as a going concern because its debts were too great and its global footprint too small. Shouldering $4.5-billion (U.S.) of long-term debt and billions of dollars more in pension and supplier claims, Nortel opted to break up the company and sell its far-flung divisions. One year after it filed for bankruptcy protection in Canada, the United States and Europe, Nortel has pulled off something that even its advisers didn't think was possible: It has generated more than $3-billion in cash from a series of robust auctions that have gone unchallenged by initially resistant creditors. Read more.