Debt-ridden WorldCom files for Chapter 11
Disgraced US telecoms giant WorldCom has filed for bankruptcy protection, becoming the biggest case of insolvency in US history.
Valued at $175bn (£111bn) at its height in 1999, WorldCom’s collapse follows fraud charges after the company admitted hiding $1.2bn in losses by falsely accounting for expenses worth $3.85bn.
The firm, which has 85,000 employees and operates in 65 countries, applied to the courts for Chapter 11 bankruptcy protection, preventing creditors from seizing the company’s remaining assets while it works on a restructuring programme.
WorldCom’s bankruptcy is twice the size of Enron’s, which filed for bankruptcy, amid an accounting storm, in December last year.
The company, whose systems handle half of the world’s e-mail traffic, had hoped to avoid bankruptcy entirely by arguing that the frauds were not endemic but were the work of individuals.