Nortel seeking 3-month bankruptcy extension

Nortel Networks wants a three-month extension on its bankruptcy protection filing while it continues to restructure. This is the second time the troubled Canadian equipment maker has requested an extension since first filing for bankruptcy in mid-January. 

The company needs "significant additional time" to finish its restructuring strategy, according to a filing made in Ontario Superior Court by Ernst & Young, the court-appointed accounting firm overseeing Nortel's bankruptcy. In February, Nortel sought and received an extension of its bankruptcy protection from creditors until May 1. The filing said that Nortel is burning through cash quickly, but that it expects to get more money from international operations. Nortel is expected to have enough cash reserves to survive until mid-summer.

Nortel's position has weakened significantly since it first entered bankruptcy protection, with the recession and the company's weak competitive standing putting pressure on its operations.

Speculation has mounted in recent weeks that Nortel is more likely to be broken up than emerge from bankruptcy as a unified company. Nokia Siemens Networks reportedly offered to buy large chunks of Nortel's businesses, including most of its carrier networks unit and its unit focused on LTE. A Nortel spokesman did not comment on the specific deals being discussed when they were first reported earlier in April, but did tell the Wall Street Journal that "planning is underway and we are pursuing opportunities that we believe will provide maximum benefit to our key stakeholders, including our creditors, customers and employees."

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