Jul 22, 2002 : WorldCom Files for Record Bankruptcy

📅 July 22, 2002 - Suffocating under an enormous debt and disgraced by a $3.85 billion accounting scandal, WorldCom Inc. entered the largest bankruptcy filing in U.S. history on Sunday.

WorldCom says that by restructuring its balance sheet and reducing debt, the company things it can emerge strong and healthy from Chapter 11 proceedings.
The company expects it will hire a restructuring expert to aid management, and aims to emerge from bankruptcy in 9 to 12 months. WorldCom's international operations are not included in the bankruptcy.
WorldCom has already said it will have access to up to $2 billion in debtor-in-possession funding in order to maintain operations and pay employees while the company is reorganized. The company will appear in U.S. Bankruptcy Court for the Southern District of New York on Monday to seek approval for the DIP Funding.
According to the company, the bankruptcy status will shield WorldCom from its creditors, freeing about $2 billion a year in interest payments on the company's massive debt.
The $2 billion funding pact, backed by Citigroup Inc., J.P. Morgan Chase & Co. and General Electric Co.'s GE Capital financing arm, along with the debt savings, will cover WorldCom's funding requirements for the next year.

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