UPDATE 2-Nortel creditors file objections to unit's sale

* Nortel's creditors, suppliers oppose Nokia Siemens deal

* Key lender touts reorganization plan, over asset sales (Adds details on objections filed, background)

By Euan Rocha

TORONTO, June 26 (Reuters) - Creditors and suppliers of Nortel Networks (NRTLQ.PK) (NT.TO) filed a series of objections on Friday to the proposed sale of a unit of the bankrupt telecom equipment maker to Nokia Siemens Networks. [NSN.UL]

MatlinPatterson, a major bondholder and Nortel creditor, said restrictive conditions imposed by the current bidding process may prevent, rather than promote, a valid competing bid to emerge for the unit, which makes advanced wireless technology.

"These restrictions serve only to permit Nokia-Siemens to effectively lock down these valuable core assets," said the creditor in a U.S. court filing.

In a bankruptcy case, when debtors lack the ability to repay creditors, the creditors have the option either to break up the company and monetize the assets, or to run the company as a going concern and take equity in lieu of their claims.

MatlinPatterson argues that the current bidding process fails to pay sufficient attention to the "going concern" option.

The firm said it has begun preliminary discussions with other creditors and is considering supporting a Chapter 11 reorganization plan in the United States, in lieu of the proposed sale.