NEW YORK (voa) – In the largest corporate failure in U.S. history, telecommunications giant WorldCom has filed for bankruptcy. The move comes almost a month after the company disclosed it had used deceptive accounting to under-state expenses by almost four billion dollars.
WorldCom chief executive John Sidgmore said Sunday his company is asking for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. That will allow WorldCom to restructure its finances while continuing operations.
In its bankruptcy petition WorldCom listed $107 billion in assets and $41 billion in debts. The company’s restructuring is expected to take up to a year.
Mr. Sidgmore said non-U.S. subsidiaries are not included in the bankruptcy petition and there will be no immediate new lay-offs. The company had already said it was laying off more than 20,000 employees. WorldCom officials say phone and internet service for than 20 million customers is expected to continue uninterrupted.
WorldCom is the nation’s second-largest long-distance telephone provider and includes the world’s biggest Internet network. It operates in 65 countries and employs more than 60,000 people in North America, Latin America, Europe and the Asia-Pacific region.
The WorldCom bankruptcy is considerably larger than that of the energy trading company, Enron, announced last December, which also involved fraudulent accounting.
A string of corporate scandals has rocked Wall Street and contributed to the slide in share prices on U.S. and other stock markets around the world.
In late June, WorldCom admitted it had improperly accounted for $3.9 billion in operation expenses for more than a year to hide losses. The company was accused of hiding expenses to inflate its stock price. The value of its stock plunged from a high of more than $64 a share to under 10 cents a share.
The New York Stock Exchange, Nasdaq, and other markets have seen some of their steepest drops in years following the recent accounting shake-ups involving WorldCom, Enron and other companies.
