WorldCom will conduct business as usual while it develops a reorganization plan under Chapter 11 of the US Bankruptcy Code, the company said Monday morning.
The company filed for court protection Sunday evening in the US Bankruptcy Court for the Southern District of New York.
That filing covers WorldCom and substantially all of its active US subsidiaries, but not its non-US subsidiaries, according to the statement.
Financial woes WorldCom's is the largest bankruptcy filing in US corporate history, the Wall Street Journal claims, with the company listing assets of over $100 billion, and having more than 1,000 creditors.
The company has debt estimated at $32.8 billion, several thousand corporate customers, serves around 20 million consumers and runs the world's biggest Internet network. Subsidiaries include Internet infrastructure company UUNet Technologies and telecommunications carrier MCI Communications.
Chapter 11 provides a financially beleaguered company a method to keep operating its business under protection from its creditors while developing a plan for resolving its financial problems.
WorldCom has obtained an agreement to arrange up to $2 billion in Debtor-in-Possession (DIP) financing, of which $750 million has already been committed by several banks. This facility, once approved by the Bankruptcy Court, will allow the company to operate its business normally while it focuses on its new strategic plan, restructures its finances, reduces its debt burden and strengthens its balance sheet, according to the statement.
WorldCom was valued at around $120 billion at its peak in the summer of 1999. Late last week, WorldCom's market capitalization had fallen to $280 million, the Journal reported.