Nortel parent files for bankruptcy

Nortel Networks Corp. and several subsidiaries have filed for bankruptcy in Canada and the United States.

But Nortel’s U.S. government business, Nortel Government Solutions, is not part of the bankruptcy proceedings. Because it is owned by a non-U.S. company, Nortel Government Solutions operates as a wholly owned subsidiary with a separate board of directors.

The Wall Street Journal and the New York Times are reporting that the parent company could be broken up and sold in pieces.

The company has been trying to right itself since 2005 as sales of telecommunications equipment have fallen and it weathers an accounting scandal. Global economic conditions “compounded Nortel’s financial challenges,” the company said.

In its statement today, Nortel Networks said that the government subsidiary and affiliates in Asia, including LG Nortel, the Caribbean and Latin America are not part of the bankruptcy proceedings.