The Tel Aviv District Court has issued an ex parte stay in proceedings for Nortel Communications Holdings (1997) Ltd. and Nortel Networks Israel (Sales and Marketing) Ltd. over their NIS 175 million debt, which is mainly owed to other Nortel Networks Corp. (NYSE; TSX: NT) companies. The stay in proceedings is valid through March 23.
The stay in proceedings applies to Nortel's two Israeli subsidiaries. The company has 124 subsidiaries worldwide. It was once the largest telecommunications equipment maker in North America and Canada's largest corporation. Last week, Nortel applied for Chapter 11 bankruptcy protection in the US, over its $6.3 billion debt, caused by the global economic crisis and slump in revenue.
Nortel Israel is a major local telecommunications equipment company. Its customers include government ministries, the IDF, banks, universities, high-tech and insurance companies, healthcare services, manufacturers, and Internet service providers.
Nortel's Israeli subsidiaries have 123 employees, and have no secured creditors. The companies owe NIS 127 million to other Nortel subsidiaries, NIS 35 million to employees (future commitments), NIS 8 million in income tax, and NIS 3-4 million to unsecured creditors. The companies say that they have NIS 61.9 million in assets, including NIS 20 million in cash.
Nortel's management decided that company subsidiaries would petition the courts in the countries where they are incorporated for stays in proceedings, in order to enable a global restructuring and recovery under a company-wide arrangement.
Published by Globes [online], Israel business news - www.globes-online.com - on January 19, 2009
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