Nortel chief executive Mike Zafirovski has stepped down.

He left the bankrupt telecommunications giant after a mid-decade accounting scandal and the troubles brought by the current economic downturn.

Zafirovski's departure follows a determination by Nortel's board that the company has reached a "natural transition point".

Nortel is liquidating its assets, having already sold its wireless operations to Ericsson for $1.13 billion and inked an agreement to sell its enterprise business to Avaya for $475 million in a "stalking horse" arrangement.

Nortel reached the decision to liquidate its assets in June, having failed to adequately restructure the company under Chapter 11 bankruptcy as a viable contender in enterprise and service provider telecommunications.

Zafirovski launched the restructuring when he came aboard in 2005 following a 2004 accounting scandal by then-CEO Frank Dunn.

Dunn and other executives were fired by Nortel for cause, and Zafirovski successfully steered the company out of the accounting and financial restatement mess.

But then the global economy soured, sales nose-dived, and Nortel filed for bankruptcy in January 2009. Now, all company operations are on the block.

In a statement, Nortel Chairman Harry Pearce said: "Mike came to Nortel to transform the company.

“He made great progress on many fronts including addressing significant accounting and related legal issues; improving the quality of Nortel products and the company's cost structure.

“His ambitious vision helped shift the economic centre of the company from legacy to growth investments. It is unfortunate the transformation was derailed by the deteriorating economic climate and the company's legacy cost structure.

“The operating improvements and strategic investments made during his tenure significantly contributed to the fact that Nortel's businesses are so attractive to potential buyers today."

In a statement, Zafirovski added: "Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount."

In addition to Zafirovski's departure, Nortel reduced its board from nine to three members. Nortel has also restructured its businesses in an effort to continue to serve customers while also facilitating their sale.

The company's business units - Wireless, Enterprise, Metro Ethernet, Carrier VoIP, Application Solutions and the Nortel-LG joint venture - will report to Chief Restructuring Officer Pavi Binning. Mergers and acquisitions teams will continue to report to Chief Strategy Officer George Riedel.

A Corporate Group has been formed to manage ongoing restructuring activities during the sales process as well as post business dispositions. This group is led by former Nortel Treasurer John Doolittle.

Nortel is also seeking Canadian court approval for Ernst & Young to oversee business, sales processes and other restructuring activities.

The company is also in the process of identifying a principal officer for the Nortel companies in U.S. Chapter 11 proceedings who will work with U.S. creditors, ad hoc bondholders and Ernst & Young.

Nortel just reported second quarter results today. Revenue of $1.972 billion was down 25% from a year ago, but up 14% sequentially. The company posted a net loss of $274 million, more than twice the net loss of $113 million from a year ago.