Christian Message Boards: WorldCom to File Chapter 11 Sunday

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Posted by Kindgo (Member # 2) on :

By Matt Moore
AP Business Writer
Sunday, July 21, 2002; 7:22 PM [boohoo.gif]

NEW YORK –– WorldCom Inc. will file for Chapter 11 bankruptcy protection Sunday, the embattled telecommunications company's chief executive John Sidgmore told The Associated Press.

The bankruptcy would be the largest in U.S. history and the latest in a spectacular series of corporate collapses. Sidgmore said the filing would take place in U.S. Bankruptcy Court in Manhattan, and ensure that the company receives about $2 billion in financing while it reorganizes.

"The first priority was to stabilize the company financially," he said. "We don't think that there will be any significant impact on the employees and vendors, for that matter, and we should have plenty of cash to make it."

Sigmore said the company would look into selling some of its peripheral businesses, but not key franchises like MCI or UUNet. MCI is the company's core long-distance business; UUNET is a major Internet player.

WorldCom admitted June 25 that it had falsely booked $3.85 billion in expenses to make it appear more profitable. The same day, the company fired chief financial officer Scott Sullivan, who was later accused by company auditor Arthur Andersen of withholding crucial information about WorldCom's bookkeeping.

WorldCom also announced layoffs of 17,000 workers, or 20 percent of its global work force.

Worldcom's collapse follows costly scandals at other big-name companies, including Adelphia Communications, Global Crossing and Enron, all of which have filed for bankruptcy protection as they attempt to pay creditors and reorganize.

The bankruptcy would be twice as large as Enron's record-setting filing in December and four times as big as Global Crossing's in January. Worldcom reported more than $100 billion in assets at the end of March but is burdened by $30 billion in debt.

Even before the hidden expenses were exposed, WorldCom was struggling. Its stock traded as high as $64.50 in mid-1999. But shares of WorldCom and other telecommunications companies have slid ever since as the dot-com bubble burst and other market forces caused an industrywide implosion.

http://www.washingtonpost.com/wp-dy...-2002Jul21.html