Feeds

Court sets March date (!) for WorldCom trial

Names monitor

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

ComputerWire: IT Industry Intelligence

The US Securities and Exchange Commission has received a provisional date for its case against near-bankrupt US telecommunications giant WorldCom Inc.

However, the company could be unrecognizable by the time the case begins as US Federal District judge Jed Rakoff has set March 31, 2003 as the potential court date. Clinton, Mississippi-based WorldCom will be charged with violating US securities laws by improperly booking $3.85bn in operating costs as capital expenses.

However, the case will not be criminal, and therefore will not likely find any of the company's various executives guilty of criminal misdeeds. Criminal charges are more likely to come out of an investigation currently being run by the US Justice Department, or from the US Congressional hearings likely to start next week.

The most important news is likely to be the court appointment of former SEC head, Richard Breeden, as the official court monitor of WorldCom. His job is to make sure that WorldCom executives are not paid more than $100,000 in compensation and that the company does not shred any important documents.

This comes at the time that the SEC has called the Federal Bureau of Investigation to investigate the improper shredding of documents at bankrupt telecommunications carrier Global Crossing Inc, whose $12.6bn and questionable accounting practices opened up a can of worms in late February. The two companies shared an auditor, Andersen, and have both been revealed to have been engaged in similar questionable accounting practices.

WorldCom, which has already defaulted on some of its bonds and seen its $7bn short-term loan facilities invalidated due to self confessed fraud, is now desperately struggling for new finance, and it is a real possibility that the company will be forced into Chapter 11 bankruptcy protection.

"I'm not going to stand up here and tell you that there's no way we're going to end up in bankruptcy of some form, at some point. But right now we are working very, very hard with the banks and others to try and find some other way to accomplish our goals," said WorldCom CEO John Sidgmore. If the banks don't deliver, WorldCom will be left to write off around $30bn in debt, which would make it the largest corporate bankruptcy in US history.

The alternative is to find a buyer for the company, although with massive quantities of US and international communications backbone bandwidth on the market, it is unlikely to fetch a good price.

The MCI business, which specializes in retail and business US long-distance telephony services, for which WorldCom paid $37bn is likely to be the company's most financially stable and attractive asset. IDT Corp has already placed an unsolicited bid for this business unit. This is ironic because one of the only companies thriving in this distressed market is the discount telecommunications house-turned-telecoms scavenger, which is buying up sound telecoms assets at rock-bottom prices in the US.

The company offered $5bn for both MCI and the wholesale network units MFS Communications and Brooks Fiber. These are the plum WorldCom businesses, and unlikely to be sold while WorldCom has any chance of continuing as a going concern.

© ComputerWire

Secure remote control for conventional and virtual desktops

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.