Telecoms equipment giant and major 2012 Olympics sponsor Nortel filed for bankruptcy protection today in a move affecting around 2,000 UK staff.
Canadian-headquartered Nortel - whose UK arm is a "tier one" sponsor of London's 2012 Olympics - has offices across the UK.
The announcement comes amid mounting concerns over the firm's future after it reported rising losses and ahead of a mammoth interest payment due tomorrow.
Nortel sought to assure that the bankruptcy protection would help it "emerge from this process as a more focused, financially sound and competitive company".
It added that today's decision was made while it has sufficient funds to run operations and to cover restructure costs.
Nortel will give details on the impact on its operations in the UK and elsewhere outside of Canada and the US in "due course".
Nortel signed up as one of the top sponsors for the 2012 Olympics at the end of July last year to help provide telecoms network services for the Games.
A spokesman for the London Olympic organising committee (Locog) said on today's news: "We are aware of the situation and will work through it with Nortel."
The deal with Locog is understood to be in the region of £40 million to provide a mixture of cash and value-in-kind.
It is believed that Nortel has met all its commitments to date.
Nortel has a large presence in the UK, with its European, Middle East and Africa (EMEA) head office based in Maidenhead, Berkshire - where it employs 1,200 staff.
It also has sites in London, in north Lanarkshire in Scotland, Newtownabbey in Northern Ireland and Harlow, Essex.
The group's Monkstown campus in Northern Ireland spans a 34-acre site and handles supply chain operations for Nortel EMEA.
Nortel is also a major supplier to major corporates and telecoms firms, such as BT.
The company said today's announcement was a "step towards a global reorganisation" of Nortel and said its day-to-day operations were expected to continue without interruption.
It said: "The company commenced a process to turn around and transform Nortel in late 2005, and the company made important progress on a number of fronts.
"However, the global financial crisis and recession have compounded Nortel's financial challenges and directly impacted its ability to complete this transformation.
"Nortel is taking this action now, with a 2.4 billion dollar cash position, to preserve its liquidity and fund operations during the restructuring process."
Its affiliates in Asia, the Caribbean and Latin America, as well as the Nortel Government Solutions business, are not included in the bankruptcy protection proceedings.
The group has been suffering amid the economic downturn, late last year announcing 1,300 job cuts worldwide and a 3.4 billion US dollar (£2.3 billion) quarterly loss.
Speculation has been growing over a possible bankruptcy move since December last year, in particular as 107 million US dollars (£73.9 million) of interest payments become due tomorrow.
Today's announcement caps a tough past eight years for the group.
Nortel - founded in 1985 as Northern Electric and Manufacturing - suffered after the dot com crash in 2001 and has since embarked on a series of hefty staff lay-offs.
It now employs around 30,000 people across 30 countries.Reuse content