Telecommunications networking gear maker is seeking three more months to reorganize under bankruptcy proceedings, and the Canadian court-ordered monitor of the Nortel case is supporting the extension.

In its latest report filed Friday with the Ontario court where Canada-based Nortel’s bankruptcy case is being handled, the monitor Ernst & Young said on the restructuring plan.

“The Monitor supports the Applicants’ request” for a 90-day extension through July 30, E&Y said in the filing.

Nortel, which filed for bankruptcy in both Canadian and U.S. courts in January, faces a May 1 restructuring date. The company has some 2,000 employees at its campus in RTP.

As of April 11, according to E&Y, Nortel had a cash balance of $2.6 billion.

Of that amount, some $661 million was “held” by Nortel’s U.S.-based entities and $198 million by Canadian entities.

“In the Monitor’s view the restructuring of Nortel will require significant additional times to formulate an agreed upon restructuring strategy in conjunction with the Monitor” as well as other entities, E&Y said in its eight such report to the Canadian court.

“The extension of the stay of proceedings to July 30, 2009 is necessary for the restructuring strategy and plan to be fully developed,” E&Y added.

Since bankruptcy proceedings began, Nortel has begun laying off thousands of its global workforce of some 25,000 people. The company also received court approval to end severance payments to workers laid off before the bankruptcy filing. Nortel also received court approval to sell off one business unit and has been rumored to be seeking bids for major parts of its remaining business.