Nortel, plagued for months by rumours of serious financial problems, has filed for bankruptcy protection or Chapter 11.
The hundred year old Canadian giant only just escaped the same fate in the last downturn in 2001. It posted a loss of $3.4bn for its third quarter, which is bad, but not nearly as bad as the sodding huge $19.6bn it lost in three months of 2001.
Nortel is seeking creditor protection in Canada, the US and Europe to give it a chance to review all its business and restructure its debt.
Mike Zafirowski, president and CEO at Nortel, said: "I am convinced that by choosing this path at this time, we can put Nortel on sound financial footing once and for all." He said the firm was "still very much in business and our commitment to our customers remains unwavering".
He said that day to day business will continue for the company which claims to have $2.4bn in the bank.
Nortel's application will be heard by the Ontario Superior Court of Justice later today. It has already filed for US Chapter 11 protection in Delaware and will make similar applications in Europe. The firm will also ask for certain restrictions on dealing in its shares.
Nortel has also made an agreement with its key supplier Flextronics to maintain inventory.
The full statement is here.
Nortel has made an agreement with Export Development Canada to guarantee continued access to $30m in credit for 30 days - it is hoping to extend this following discussions.
The decision also delays Nortel's payment of $107m in interest payments to bond holders, CBC News reports.
That payment would once have been a piddling amount to a company that was worth in excess of C$350bn at its peak at the turn of the century, employing almost 100,000 people.
Today its headcount is a quarter of that, and its shares were changing hands at C$0.11, giving it a market cap of C$57m itself a catastrophic collapse on its 52 week high of C$14.®