Nortel Networks Corp. is seeking bankruptcy protection in the U.S. and Canada, but it remains to be seen how local jobs with the telecommunications firm will be affected.
The company said yesterday it will file for Chapter 11 bankruptcy protection in a Delaware court and under the Companies’ Creditors Arrangements Act protection in Canada, and while other subsidiaries were expected to make similar filings in Europe, the company hasn’t said yet how operations in Ottawa will be affected, said Karen Monaghan, a Nortel spokeswoman working out of Ottawa.
The Ottawa location, which employs 4,300 people, is still the heart of Nortel’s research and development, said Monaghan. “All of Nortel’s product range is represented in Ottawa because this is such a major R&D location,” she said.
“We’re very committed to the region. Nortel will be putting a business plan in place and until that’s done, we don’t have further information.”
Still, it’s likely that “as we go through restructuring, there will be an impact on jobs,” she said.
“We’ve initiated the process to strengthen the business,” said Nortel spokesman Mohammed Nakhooda yesterday. “It’s expected that Nortel’s day-to-day operations will continue without interruption. We do anticipate as a part of restructuring there will be an impact on employees … but there is no employee reduction or impact as a part of today’s announcement.”
While the company commenced a process to turn around and transform Nortel in 2005, the global financial crisis and recession has compounded the company’s financial challenges.
“Nortel must be put on a sound financial footing once and for all,” said Nortel president and CEO Mike Zafirovski in a release.