WorldCom continues operation under investigator's scrutiny
NEW YORK -- WorldCom Inc. has received preliminary court approval to go about its day-to-day operations, but the telecommunications company will be under intense scrutiny as it tries to emerge from the biggest bankruptcy in U.S. history.
The Clinton, Miss.-based company got permission from the U.S. Bankruptcy Court in Manhattan on Monday to spend $2 billion in interim financing so that it can keep doing business.
U.S. Bankruptcy Judge Arthur J. Gonzalez also approved the appointment of an independent investigator sought by the Justice Department to look into mismanagement, irregularities and fraud.
Attorney General John Ashcroft said an independent examiner "will provide transparency to the process" and increase public confidence in how the case is handled.
WorldCom filed for Chapter 11 bankruptcy on Sunday, less than a month after it was revealed that the long-distance company hid nearly $4 billion in expenses through deceptive accounting. It is the biggest company to fall victim to scandal since the Enron Corp. debacle of last year.
WorldCom attorney Marcia Goldstein said the credit facility came from lead lenders: Citigroup Inc., J.P. Morgan Chase and GE Capital, a unit of General Electric Co.
"It was the best overall financing package that the company could obtain," said Goldstein.
The company will also pay $45 million a month to its current workers and $23.7 million in severance to the 5,100 laid off employees. They'll receive $4,650 each.
The U.S. Trustee's request for an independent examiner, although such moves are routine in bankruptcies of this magnitude, underscored concerns about whether WorldCom's current management team represents a clean enough break from the past.
John Sidgmore, the company veteran who recently stepped in as chief executive, has come under scrutiny for his ability to steer the company out of scandal because he worked at high levels in the company amid the accounting scandal.