July 22, 2002
Always striving to be the biggest if not the best, WorldCom today topped Enron, filing the biggest-ever corporate bankruptcy case. Its filing listed more than $107 billion in assets.
Government and industry bureaucrats rushed to assure the 20 million consumers who use WorldCom's MCI long-distance service that their service won't get any worse. Of course, for the thousands still trying to straighten out longstanding billing nightmares, that's not much consolation.
"I want to assure the public that we do not believe this bankruptcy filing will lead to an immediate disruption of service to consumers," said Michael K. Powell, chairman of the Federal Communications Commission.
On the other hand, with one round of massive layoffs just complete and more expected, industry insiders said it's hard to imagine how the already-spotty service could not experience additional slippage.
The biggest losers at the moment are the company's shareholders. Not long ago, WorldCom was one of the world's most valuable companies, valued at more than $100 billion. Today, it's virtually worthless and the stockholders are, essentially, wiped out.
CEO John Sidgmore, who made millions selling his stock before the plunge, said the company would "go forward aggressively" and ultimately "emerge as a stronger company."
The bankruptcy filing relieves WorldCom of about $2 billion of interest payments over the next year. Three major lenders -- Citigroup, J.P. Morgan and General Electric Capital -- are putting up about $2 billion in new financing. Under bankruptcy rules, they'll be first in line to be repaid.
The lenders are counting on the monthly payments from customers large and small to provide the cash flow that keeps the company running and eventually pays them back.
