Nortel Networks, the maker of telephone equipment, filed for bankruptcy protection on Wednesday, a day before it was scheduled to make an interest payment of about $107 million. The company is the first Technology-based company that filed for Chapter 11 bankruptcy at this economic tsunami.

Nortel and a number of its affiliates filed for Chapter 11 bankruptcy protection in federal bankruptcy court in Delaware.

Nortel’s shares have tumbled along with the company’s fortunes, sinking into penny-stock territory in recent months. Besides, Nortel has faced intense competition from North American and European rivals such as Alcatel-Lucent, as well as low-cost Asian vendors such as Huawei Technologies.

The company has also suffered as telecommunications companies scale back spending on the equipment that Nortel makes.

The global economic slowdown has exacerbated Nortel’s problems, leading it to warn last month that because of current conditions, its business is under pressure and its cash and liquidity are deteriorating.

In November, it reported a $3.4 billion quarterly loss, cut its 2008 outlook and announced 1,300 layoffs, or about 5 percent of its staff.

Source: REUTERS