Two months after the telecom equipment maker filed for bankruptcy in January, it pledged to have a reorganization roadmap ready for investors and other parties by this month. Now Nortel is asking to push that deadline back to July 30.
The company’s court-appointed monitor, Ernst & Young, said the request is warranted. Cost-reduction efforts including job cuts and real-estate disposition prove that Nortel is working to spend less cash, the firm wrote in a court filing. The 3,200 layoffs announced in February mark “the first phase” of such cutbacks, Ernst & Young said, and attempted property sales also speak to Nortel’s intent to reorganize. Both moves illustrate Nortel’s diligent work and “good faith towards developing a restructuring strategy to address its financial and strategic issues,” Ernst & Young wrote.
Nortel’s request for more time came as little surprise, especially given industry speculation that Nortel will emerge from insolvency in pieces, not as a whole company. Several Nortel rivals already are reported to have placed their bids for certain divisions and there’s little consensus among pundits that the Canada-based equipment giant could re-emerge intact anyway.
Ernst & Young noted, too, in the filing, that Nortel has about $2.6 billion of consolidated cash. However, $525 million of that is unavailable for use because it’s been set aside for joint ventures or other hands-off commitments, according to Ernst & Young.
Nortel’s stock hasn’t traded on the New York Stock Exchange since Jan. 13. It remains priced at 32 cents.