MatlinPatterson Global Advisors, a private equity company specialising in distressed investments, is considering leading a rescue bid for the whole of Nortel Networks, the struggling Canadian telecommunications equipment maker operating under bankruptcy court protection.

The New York-based private equity company, which has emerged as one of Nortel's biggest creditors, owning $400m or 10 per cent of Nortel's debt, is trying to put together a consortium of investors to fund a recapitalisation of the Canadian company, according to people familiar with the situation.