Nortel files for bankruptcy – TCS, Infosys, Wipro and Sasken may have impact
Economic recession, global credit crunch and declining sales have another victim – Nortel Networks Corp, North America’s biggest maker of telephone equipment, filed for bankruptcy protection in Wilmington, Delaware .
Nortel which was based in Toronto has approached court for Chapter 11 filing of its US subsidiary. The company said that several Canadian affiliates will also seek court protection.
Off-late the company was focusing on newer wireless technology called WiMax. If it is also a failure of WiMax we may see many such C-11s. Here are some facts about comapny
Chief Executive Officer: Mike Zafirovski
Business: Telecommunications equipments
Largest creditor: Bank of New York Mellon $3.8 billion
Effect on Indian companies
The bankruptcy filing of networking vendor Nortel will take toll on the entire IT sector with a focus on those heavey in telecommunications. Although the Asian and Indian operations are not included in the bankruptcy proceedings and are expected to continue as normal – the affect will be on outsourcing revenue of companies like TCS, Infosys, Wipro and a telecom focus company Sasken.
What is Chapter 11 filing?
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. In Chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. In Chapter 11, in most instances the debtor remains in control of its business operations as a “debtor in possession”, and is subject to the oversight and jurisdiction of the court.
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