Despite hiring former Motorola executive Mike Zafirovski to turn things around after its accounting and management imbroglio a few years ago, Nortel Networks has opted today to file for bankruptcy protection in Canada and the U.S. The Toronto Globe & Mail notes ruefully that filing for Chapter 11 is "a move that will likely see what was once Canada's great corporate success story broken up and sold to foreign rivals."

Toronto-based Nortel, the newspaper reports, applied for court approval for creditor protection in Delaware today and was expected to file in Toronto, as well. Nortel executives had no comment to make yesterday on the company's future plans, the paper added.

The Globe & Mail also noted that:

"While not bankrupt – the company has an estimated $1-billion in its coffers – Nortel is burning though cash at an impressive clip, and has $4.5-billion (U.S.) in long-term debt. Major lenders include JPMorgan Chase, Citigroup and Royal Bank of Canada."

The New York Times noted that "Since the beginning of the decade, Nortel has started a series of restructurings that have included 16 rounds of layoffs," adding:

About 6,000 of Nortel’s 26,000 remaining employees are based in Canada, many at its research labs in Ottawa. But it is unclear how far the Canadian government is willing to support the company. Unlike, say, automakers, it is possible that Nortel may shift many of its jobs now in Canada to low labor cost markets such as India and China."

Commenting on the filings, Zafirovski said: "These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry."