Nortel plunged deeper into crisis as it sought legal advice on filing for bankruptcy protection to save itself from creditors. The company is reportedly exploring this option in case its restructuring plans announced last month fails.

"On November 10th, we put in place an aggressive plan to bring down costs by $400 million with a minimum level of cash outlay. The goals we laid out on November 10th have not changed," said Nortel in a bid to assure that the move to file for bankruptcy was only a possible avenue and a final decision was not being made.

The company also made an effort to draw attention to credit ratings by refuted firms which said that Nortel should be able to maintain its liquidity position for atleast next 12-18 months.

But there are some analysts feel otherwise. They caution that the company’s tight cash crunch may cause its downfall.

Nortel has already shifted itself on cost cutting mode with the company slashing 1300 jobs, plans to sell of the Ethernet business.

Shares of the company fell to C$0.51 on the Toronto Stock Exchange. With this the valuation of the company turns to be $ 194 million as compared to once held valuation of $ 250 billion in 2000.