A judge on Wednesday approved a $750 million settlement agreement between MCI and the Securities & Exchange Commission over one of the largest frauds in corporate history.
The agreement marks an integral step in MCI’s plan to emerge from bankruptcy in the fall. A confirmation hearing on its reorganization plan is scheduled Sept. 8 before the U.S. Bankruptcy Court for the Southern District of New York.
The terms of the SEC agreement call for MCI to pay $500 million in cash and $250 million in common stock to shareholders and bondholders upon emerging from bankruptcy.
Last year MCI revealed inflating its earnings over several fiscal quarters in a fraud that could be as high as $11 billion.
The telecommunications giant has put in place several new executives and policies to clean up its reputation, but a new cloud is hanging over the Ashburn, Va.-based company amid allegations that it concealed the origin of phone calls to avoid paying access charges.
The U.S. Attorney’s Office is investigating the matter, but MCI has said it has broke no laws nor violated any regulations, according to a preliminary review of an internal analysis.
In a reorganization plan filed with the bankruptcy court in April, MCI said it expected to exit bankruptcy with $1 billion in cash and $4.5 billion to $5.5 billion in debt.
