Nortel Seeks Advice on Bankruptcy: Report

A spokesman said ''no bankruptcy filing is imminent," but Nortel has sought legal counsel to explore bankruptcy protection if its restructuring fails, a report says.
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Nortel Networks

(NT)

has sought legal counsel to explore bankruptcy-court protection from creditors in the event that its restructuring plan fails, the

Wall Street Journal

reports, citing people familiar with the situation.

The Toronto company has been grappling with plummeting sales for its wireless gear and as the credit crunch hobbles the sale of key assets.

Ronald Alepian, a spokesman for Nortel, said that "no bankruptcy filing is imminent," but added that the company has engaged several advisers to help it chart a way forward, the

Journal

reports. "We remain focused on carrying out the restructuring we outlined on Nov. 10 to cut costs," he said.

The spokesman said Standard & Poor's in November reaffirmed Nortel's ratings, saying the company "should be able to sustain adequate levels of liquidity in the next 12-18 months" despite difficult market conditions.

Nortel also has been exploring potential assistance from the Canadian government, the newspaper reports. But disarray within the Canadian government is clouding those prospects, the

Journal

says.

The

Journal

says telecommunications-equipment maker Nortel was once Canada's largest company. Nortel's market value topped $250 billion in 2000 amid the telecom boom, but has since shriveled to $275 million. The company's stock has been trading below the $1 minimum on the

New York Stock Exchange

for a month.

This article was written by a staff member of TheStreet.com.