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Nortel UK goes into administration to save itself

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Nortel UK, and most of the comms giant's European operation, has gone into administration a day after its Canadian parent filed for bankruptcy protection.

The company said yesterday that its US and Canadian businesses were seeking Chapter 11 bankruptcy protection. The UK firm will be overseen by overseen by Ernst and Young.

A press statement from Nortel Networks UK said:

On a global basis, adverse economic conditions have made the current capital structure of Nortel Networks Inc. unsustainable and it is imperative that the Group addresses its financial position and the legacy costs burdening its balance sheet, to overcome current challenges and reposition itself for the future. The Group concluded that the best way to effect this transformation was to undertake a restructuring process.

Nortel has 30,000 staff around the world and 2,000 in the UK.

Darryl Edwards, Nortel's Europe, Middle East and Africa, was scheduled to hold a webcast at midday today with Alan Bloom and Stephen Harris of Ernst & Young to tell staff what the decision meant for them.

According to the internal email from Edwards seen by The Register, the move into administration is designed to allow the root-and-branch restructuring of the company and its finances. "Nortel plans to emerge from this process as a more focussed, financially sound and competitive Company", it says.

The mail also said: "This is the start of a new journey for us and I'm counting on your patience and continued cooperation."

It is hoped the move will not have much impact on day to day business at the firm.

Nortel businesses in the following countries will be subject to the same reorganisation process: Austria, Belgium, Czech Republic, Finland, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Slovenia, Spain and Sweden. Denmark and Saudi Arabai, under UK ownership, are also included. There will be differences in each country based on local employment and other laws. ®

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