KWAME HOLMAN: The widely anticipated filing of Chapter 11 bankruptcy came just a month after WorldCom's accounting scandal first broke. CEO John Sidgmore said the telecommunications giant had no other choice.
JOHN SIDGMORE: And frankly, it became the only way to provide for our company's future. That future, we believe, is important not only to our 60,000-plus employees and our 20 million customers, but to the U.S. Government and general public as well.
We'll continue to pay our employees and provide benefits for those employees. We'll continue to provide service to our customers and pay our suppliers for their products and services.
KWAME HOLMAN: Under Chapter 11, WorldCom may continue to operate its businesses, but under the supervision of a federal bankruptcy court. The company must submit a reorganization plan, which must be approved by the court and by WorldCom's creditors. If reorganization is completed, the company will be released from court supervision.
WorldCom says its more than 70 affiliated companies will remain in business, including MCI, the nation's number two long distance carrier, and UUNET, one of the nation's largest carriers of Internet traffic. It's part of what's known as the Internet backbone.
Bankruptcy is the latest in a long slide for a company whose stock peaked at $64 in June of 1999. Since then, the overall technology sector has suffered a series of setbacks, and in late June, WorldCom revealed it misstated nearly $4 billion in expenses. This morning WorldCom was trading at eight cents a share when CEO Sidgmore spoke to the press.
SPOKESPERSON: Do you swear the testimony you are about to give...
KWAME HOLMAN: Going forward, the company faces a host of investigations. Congressional panels are looking into the scope of the accounting malpractice, as well as the role of former CEO Bernard Ebbers, suspected of complicity in the accounting scandal. Ebbers resigned in June, as news reports indicated he owed WorldCom $400 million in personal loans.
Meanwhile, the Securities & Exchange Commission, which last month charged WorldCom with civil fraud, also is looking into Ebbers' activities. And today, the Justice Department asked WorldCom's bankruptcy judge to appoint an independent investigator to look into potential criminal wrongdoing. For their part, WorldCom's current leaders have commissioned a full-scale audit of their company by the firm KPMG.
JOHN SIDGMORE: I suspect that we won't be able to give you a truly definitive answer on our accounting until we complete... until KPMG completes its audit of our books. And our best guesstimate as to when that's going to occur is by the end of the year, but that could even slip a little bit past there.
KWAME HOLMAN: Sidgmore said he hopes the company will be able to emerge from bankruptcy as early as next spring.