TORONTO - Shares in telecom equipment giant Nortel Networks Corp. quickly lost nearly two thirds of their value Wednesday after the company and several of its units filed for bankruptcy protection from creditors.

Nortel stock, which had been halted, dropped 24.5 cents to 14 cents on the Toronto Stock Exchange, its high of the day after wobbling as low as eight cents earlier in the session.

Once the kingpin of Canadian technology and one of this country's most widely held stocks, Nortel and several of its units filed for Chapter 11 bankruptcy protection in the United States and were set to do the same thing in Canada under the federal bankruptcy protection law.

The high-tech company has faced a variety of troubles since the telecom bubble burst eight years ago, including accounting problems that devastated its stock and led to criminal charges against former executives and most recently the sharp slump in the economy.

North America's biggest maker of telecommunications equipment has been dealing with a sharp drop in orders from phone company clients, squeezed by the global credit crunch and the slumping U.S. economy.

Nortel said the recession was the last straw, squeezing its markets and forcing it to make an application under the federal Companies' Creditors Arrangement Act that will be heard later Wednesday by the Ontario Superior Court of Justice.

The company, which employs about 32,000 people around the world and several thousand at Canadian operations in Ottawa and Toronto, said it will continue business as usual while it restructures.

However, Nortel said it will pare down to its core business, narrow its strategic focus and deal with its costs and debt, which have hampered the company's ability to restructure since 2005.

"Nortel must be put on a sound financial footing once and for all," company president and CEO Mike Zafirovski said in a news release Wednesday morning.

"These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be."

In Ottawa, federal Industry Minister Tony Clement said Ottawa is willing to provide financing to help Nortel restructure and emerge from bankruptcy protection as a viable company.

"The government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada," Clement said in a statement.

" EDC has agreed to provide up to $30 million in short-term financing through its existing bonding facility and is open to discussing with Nortel post-filing financing in conjunction with other financial institutions."

Nortel said it began restructuring more than three years ago and made important progress.

"However, the global financial crisis and recession have compounded Nortel's financial challenges and directly impacted its ability to complete this transformation."

Nortel's U.S. subsidiaries, including Nortel Networks Inc. and Nortel Networks Capital Corp. filed the petitions in the United States, while other subsidiaries were expected to make similar filings in Europe.

The company said the decision was made after its board of directors had gathered in Toronto on Tuesday night to assess the company's financial options.

The meetings came two days before Nortel is due to repay a $107-million interest debt on its bonds. The transaction would deplete Nortel's North American cash reserves by about 10 per cent.

Creditor protection would give the company more opportunities to explore restructuring options or sell some of its assets, but it would also make the company more vulnerable to a quick sale.

The latest round of problems began in November when the company said it would cut another 1,300 jobs and freeze salaries after a multibillion-dollar quarterly loss amid "worsening economic conditions."

The company posted a $3.41 billion loss, worth $6.85 per share, versus a $27 million profit or five cents a share in the comparable quarter a year earlier.

Sales were also lower, at $2.32 billion from $2.71 billion a year ago.

Nortel once had more 95,000 employees and a stock market value of C$366 billion on the Toronto Stock Exchange, making it Canada's most valuable company. At Tuesday's stock value it was worth under $200 million.

Since the telecom bubble burst, Nortel has grappled with a variety of financial problems, and shrank to less than one-third its peak size, but failed to re-establish itself as a leading player in its industry.

Nortel, which still has about $2.4 billion in cash, said its effort to transform its operations has been impacted by the global financial crisis and recession.

Nortel could still persevere and make it through their latest round of trouble, suggests Peter Chapman of Bankruptcy Creditors' Service Inc. in Pennsylvania.

"There's every indication at this early juncture that Nortel will survive, confirm Chapter 11 and CCAA plans, and successfully emerge from its restructuring," he said in an email to The Canadian Press.

"The Chapter 11 and CCAA proceedings will provide Nortel with the ability to sell useless assets, walk away from every bad business deal, improve its operations and operating margins, and knock its $11-billion debt load down to a reasonable level."

Chapman said he expects shareholders will likely be wiped out as owners, and the company will be transferred into the hands of its creditors.

Rick Franklin, an analyst at Edward Jones brokerage, says a series of bad decisions led to Nortel's current predicament.

"They put too much debt on the company when times were good, and times didn't stay good forever," he said.

"Their position in the market changed dramatically and they never recovered from that."

Nortel's bankruptcy filings raises questions over whether the company will continue to sponsor several major events including the 2010 Vancouver Olympics and the 2012 London Olympics.

The Vancouver event lists Nortel as an "official supplier" alongside Bell Canada, while the company is one of London's "tier one" sponsors, committing to provide about 40 million pounds (US$58 million) in cash and the network infrastructure to operate communications with partner British Telecom.

Nortel said that affiliates in Asia, including LG Nortel and in the Caribbean and Latin America, as well as the Nortel Government Solutions business, are not part of the bankruptcy proceedings.

Shares in Nortel are pending a delisting review by the exchange to ensure that the company is meeting the requirements of continued listing.

At their peak, and before consolidation, Nortel shares hit $124.50 on the TSX in July, 2000.