WorldCom, with an annual revenue of $35 billion, has a $41
billion debt, following an accounting scandal that left the company
without access to capital. The fraud involved hiding $1.2 billion
in losses by falsely accounting for expenses of $3.85 billion,
making the company look profitable when it was not.
WorldCom claims that it will continue its normal operations and
that the bankruptcy filing will protect it from creditors during a
restructuring programme. The bankruptcy, which was filed by the
company and its 180 domestic subsidiaries, will not apply to its
non-US operations and foreign affiliates.
The WorldCom bankruptcy filing is the largest in the US
corporate history, dwarfing Enron’s. The company listed in the
filing assets valued at $107 billion. Enron had listed assets of
$63.4 billion.
According to a Wall Street Journal report, however, the
company’s assets today may be valued at less than $15 billion.
WorldCom’s list of major creditors includes JP Morgan Chase and
Deutsche Bank.
The company, which hoped to avoid bankruptcy until yesterday,
intends to focus on its core business and sell all non-essential
assets. WorldCom’s CEO John Sidgmore said: “If we can emerge from
bankruptcy without the debt load, we can have a strong position in
the industry. We might emerge with the strongest balance
sheet.”
