When a company – particularly a long-time giant – files bankruptcy, the postmortems tend to focus on the missteps and the executives responsible for those decisions. The atmosphere and environment surrounding the decision often are overlooked. Until now.
The Canwest News Service is running an in-depth, eight-part series on the days leading up to Nortel Networks’ Jan. 14, 2009 bankruptcy filing. Some of the key details include description of the small office near Toronto’s international airport where company leaders, directors and advisers convened to discuss Nortel’s situation. And the atmosphere was gloomy. Wall Street had collapsed just months before, in September 2008, taking with it the fortunes of many of its service provider customers. For Mike Zafirovski, then-CEO, the prospect of insolvency was a personal matter.
“I’ve never left anything in worse shape than I found it,” he famously declared in 2005 when he took over as Nortel head, knowing he faced a daunting turnaround task. Zafirovski resigned from Nortel in early August of this year.
Interestingly, one of the facts about the Nortel bankruptcy is that the company actually had a hoard of cash, about $2.4 billion, when it filed for Chapter 11 protection. But most of the dough was tied up in foreign subsidiaries, joint ventures and pension funds. The money could not be returned to Nortel’s Canadian operations before bankruptcy became a reality. Now it’s set to be doled out among Nortel’s many creditors, but that won’t happen for a long time as Nortel continues to sell its assets and judges determine who will get paid first.