FAQ: What's going on with Nortel?

could come up about $9 billion short.

How did this all come about?

Nortel ran into problems around the time the high-tech bubble burst in 2000. The company stock was selling for an all-time high of $900 per share (adjusted for splits), but to make its bottom line more attractive, it was also exaggerating its profits -- a $3.2 billion fraud.

The CEO at the time, Frank Dunn, was fired and fined, as were the CFO and controller.

The company acknowledged its problem in 2004, refiled its financial statements for the previous four years, and hired a new CEO. But the scandal lingered until 2007 when Dunn and others were charged with fraud -- charges they are still fighting.Meanwhile, Nortel went on a campaign to reorganize and downsize, dropping from 95,000 employees in 2000 to 26,000 today. CEO Mike Zafirovski, a turnaround specialist was hired in 2005, but was unable to stop the company's slide despite repeated layoffs, sell-offs and new leadership.

International financial troubles compounded the situation, with plummeting stock performance reducing the company's value and making borrowing more difficult.