Nortel a Symbol of Canada Bankruptcy Woes

American’s aren’t alone in their economic struggles.

Several news outlets recently offered close-up accounts of the economic difficulties many are facing in Canada.

Reuters reports both business and consumer bankruptcy filings have risen sharply since last year. A weak job market has been partly to blame for a 29 percent increase in personal bankruptcy filings.

The construction, manufacturing, retail and food services businesses have also been hit hard. Now, though, the economic pain is spreading to other areas, including technology.

The Nortel Corp., a Toronto based company, filed for bankruptcy protection in January of this year. The company began having problems when the technology stock prices collapsed. Nortel Corp has operations in both Canada and the U.S.

The decision to file for bankruptcy was approved at a board meeting in attempt to avoid $107 million in interest payments. The company had to file for bankruptcy protections in both Canada and the US. Currently, Nortel has $4.5 billion in debt.

The Canadian government has offered some help to the struggling company. A government owned bank, Export Development Canada, agreed to supply Nortel Corp with $30 million in loans.

While under bankruptcy protection, the company recently auctioned off a part of their company that develops networks used to transmit data within and between cities.

The New York Times reports that Maryland-based Ciena Corp., won the auction buying the company’s division for $530 million plus $239 million in senior notes.

The transaction depends on the approval from the U. S. bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.

The bankruptcy court hearing is scheduled for Dec. 2 of this year. The Canadian government has the option to review the transaction under the Investment Canada Act in order to determine if it will benefit the country.