Nortel to ask for extension of creditor protection

Lawyers representing Nortel Network Corp. are asking an OntarioCommercial List court to extend until July 30 the stay of proceedingsagainst the telecom equipment maker under the Companies CreditorsArrangement Act.

Nortel filed for bankruptcy protectionJan. 14 in the U.S. and Canada, the day before it was due to pay $107million in interest on bonds. It has lost more than US$7 billion since2005, and has since sold its application acceleration products toRadware and announced 3,700 layoffs.

The company was initially given a stay on proceedings until Feb. 13,in order to give the company time to develop a restructuring plan forconsideration by its creditors and the court. The stay was extended toMay 1.

On Tuesday, Nortel is scheduled to appear before Justice Morawetz ofOntario Superior Court asking to extend the stay a second time, untilJuly 30, to give the company and its court-appointed monitor, Ernst& Young, more time to work on a restructuring plan.

In a court filing, Ernst & Young stated the second extension “Isnecessary in order to provide stability to Nortel’s business” while itworks on a restructuring plan.

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Jim Love, Chief Content Officer, IT World Canada

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