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On November 10, 1997, WorldCom and MCI announced their US$37 billion merger to form MCI-WorldCom , making it the largest merger in US history.
In June 2002, an internal audit discovered that US$3.8 billion had been 'miscounted.' The US Securities and Exchange Commission launched an investigation into these matters on June 26, 2002. (See accounting scandals.)
On July 21 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history. Its CEO and founder, Bernard EbbersCanadian born Bernie Ebbers (born 1941) took a tiny company and turned it into a telecom empire known as WorldCom. Today, Ebbers is fighting charges in Oklahoma that he violated the state's securities laws by defrauding investors, among other things., came under fire for his failure to prevent the bankruptcy.
In August 2002, an additional $3.3 billion in improper accounting since 1999 was announced. By the end of 2003, it was estimated that the company's assets had been inflated by around $12 billion.
In May, 2003, the company was given a no-bid contractA no-bid contract is a military or government contract that is made directly with a corporation, bypassing the standard process of bidding. These contracts can be made much more quickly than a typical contract, however they are often fraught with suspicio by the United States Department of DefenseThe United States Department of Defense abbreviated DoD or DOD and sometimes called the Defense Department is a civilian Cabinet organization of the United States government. The Department of Defense controls the U. military and is headquartered at The P to build a cellular telephone network in IraqThe Republic of Iraq is a Middle Eastern country in southwestern Asia encompassing the ancient region of Mesopotamia. It shares borders with Saudi Arabia and Kuwait to the south, Turkey to the north, Syria to the north-west, Jordan to the west and Iran to. The deal has been criticized by competitors and others who cite the company's lack of experience in the area. [1]
The company emerged from Chapter 11See also: Chapter 11 Bookstore, a retail chain of bookstores. Chapter 11 is a part of the US bankruptcy code. When a troubled business decides that it is unable to service its debt or pay its creditors, it can file (or be forced by its creditors to file) bankruptcy in 20042004 is a leap year starting on Thursday (the link is to a full 2004 calendar), and has also been designated the: International Year of Rice International Year to Commemorate the Struggle against Slavery and its Abolition Elections are to be held in 73 co with a new name, MCI, and about $5.7 billion in debt and $6 billion in cash. About half of the cash was intended to pay various claims and settlements. Previous bondholders ended up being paid 35.7 cents on the dollar, in bonds and stock in the new MCI company. The previous stockholders' stock was valueless.
Under the bankruptcy reorganization agreement, the company paid $750 million to the SEC in cash and stock in the new MCI, which was intended to be paid to wronged investors.
WorldCom (now MCI) has yet to pay its creditors, who have waited for 2 years for a portion of monies owed. Many of the small creditors include former employees, primarily those who were laid off in June 2002 and whose severance and benefits were withheld when WCOM filed for bankruptcy. A group of some of these employees have formed the exWorldCom5100 group.
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