WorldCom Inc., the embattled telecom carrier short on funds and long on controversy, could file for bankruptcy protection as early as this weekend. If it happens, it would become the largest insolvency case in U.S. history.
Cash-strapped and alienated from a consortium of banks, the debt-laden telephone and Internet giant acknowledged a Chapter 11 bankruptcy protection could be filed before Monday, The Wall Street Journal has reported. The Journal cited sources familiar with the situation.
WorldCom reportedly has secured $2 billion in debtor-in-possession funding that it could use to operate under a bankruptcy filing. But the company has fallen out of favor with investors for months as the telecom sector has imploded.
The carrier’s problems intensified in June, after it disclosed that it improperly booked $3.85 billion in expenses during the past five quarters by using an accounting method that allowed it to elude losses.
The scandal has soured the telecom industry during a year of corporate mistrust and drawn the Securities and Exchange Commission, Justice Department and Congress into the fray.
