Creditors Left in the Cold: Nortel Still $3B Short

Nortel Networks increased its quarterly losses by 20 percent in the three months ended July 31, a figure that should come as no shock as the bankrupt telecom equipment maker runs out of assets to sell and looks ahead to an early 2011 operations wind-up date.

On Friday, Nortel said it lost $649 million in the third quarter and kept its cash balance flat, at $1.7 billion. All told, Nortel has reaped about $3.2 billion as it has auctioned off valuable holdings including the Carrier VoIP and Metro Ethernet Networks divisions. And while that $3.2 billion might sound like a large-enough amount to pay off creditors, its not Nortel owes various companies, investors and other entities more than $6 billion.

Amid that activity, Nortel spent more than $500 million to re-organize, sell and otherwise shut down its businesses.

Still, Nortel said, its auctions to buyers including Ericsson, Avaya and GENBAND have saved 13,000 jobs. In Nortels home base of Ottawa, however, about 1,000 people have lost their Nortel positions.

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