WorldCom Files Largest Bankruptcy in US History

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Last updated at: (Beijing Time) Tuesday, July 23, 2002

WorldCom Files Largest Bankruptcy in US History

WorldCom, the second largest US long-distance carrier, has filed for bankruptcy on Sunday, the biggest one in the United States, according to the CNN.

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Latest statistics from the China Internet Network Information Center (CNNIC) show that the number of China's internet users maintained rapid growth in the first half year of 2002. By the end of last June, the number of netizens had topped 45.8 million, an increase of 12.1 million or 35.9 percent in six months.

WorldCom, crushed by dwindling cash reserves and heavy debt burden, filed for Chapter 11 bankruptcy protection late Sunday, the largest case in US history with 107 billion dollars in assets.

WorldCom, the nation's second largest long-distance telephone company after AT&T Corp., made its filing in the US Bankruptcy Court in Manhattan, only one month after it revealed that it hid 3.85 billion dollars in costs over the five quarters from the beginning of last year.

In its filing, the telecommunications service provider listed 107 billion dollars in assets, and 41 billion dollars in liabilities that included 24 billion dollars in bond debts.

Under the Chapter 11, the company can continue to provide its services while it develops a reorganization plan. Even if the planfails, authorities say its networks will keep operating until theyare sold.

WorldCom arranged a credit line of 2 billion dollars to help fund its operations during reorganization under the Chapter 11 protection. J.P. Morgan Chase, Citigroup and General Electric's GECapital unit agreed to provide the financing, which must be approved by the bankruptcy court.

Based in Clinton, Mississippi, the company also operates the world's largest Internet network. It has more than 20 million customers and 85,000 employees in 65 countries, but it's cutting 17,000 jobs, more than 20 percent of its workforce, under a plan announced in June.

WorldCom was under investigations by criminal prosecutors at the Justice Department and at least two congressional committees. The Securities and Exchange Commission filed civil fraud charges against it in federal court in New York following its accounting scandal.

Bernard Ebbers, chief executive officer of WorldCom, resigned in April amid a probe from the Securities and Exchange Commission about 366 million dollars in his personal loan from the company. Former vice chairman John Sidgmore took his position.

The fraud then sparked a national outrage, which was denounced by President George W. Bush in public talks. The scandal was also one of the major events that started a campaign for corporate reform and led to a tough Senate bill on the reform of the accounting industry.

WorldCom' shares, closing at 9 cents on Friday, declined more than 90 percent since June 25 when it disclosed its accounting irregularities. They traded at 62 dollars per share in 1999 when its annual sales peaked at 35.9 billion dollars after completing its merger with MCI, the largest in history at that time.

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