The biggest maker of telephone equipment in North America, Nortel Networks, has filed for Chapter 11 bankruptcy protection.
Nortel employs about 95,000 people worldwide. It is based in Toronto, Canada.
Under US Chapter 11 bankruptcy protection law, a company can keep trading while it tries to sort out its finances.
Nortel said that the bankruptcy protection is intended to help it "emerge from this process as a more focused, financially sound and competitive company".
The decision was made while it had sufficient funds to run operations and to cover restructure costs, it added.
The BBC reports the filing was made a day before the company was due to make an interest payment of $US107 million on outstanding loans.
