MCI Delays Chapter 11 Exit

It'll be a while yet before MCI rejoins the telecom party.

The company moved Wednesday to postpone filing final papers with the bankruptcy court. MCI said it filed for the 60-day delay to catch up with its accounting paperwork as it prepares to emerge from Chapter 11.

"The extension would give the company sufficient time to complete its filings with the Securities and Exchange Commission, the last significant task to be completed before the company emerges," MCI said.

MCI, the nation's No. 2 long-distance telco, had been set to emerge from Chapter 11 this winter. Wednesday's filing could postpone that event till spring. The Ashburn, Va., company noted that other than the financial filings, MCI has satisfied "all significant tasks required for its emergence," including regulatory and creditor approvals.

When MCI does emerge, it will cap off a contentious process fraught with opposition from rival telcos such as Verizon (VZ) and AT&T (T). Those companies contend that MCI has gained an unfair advantage through the bankruptcy process, which allowed MCI to trim its operations and slash debt even as other big telecom companies remain burdened with costs.

"Accounting and disclosure matters have been properly resolved, and our 2002 10-K is almost ready for filing," financial chief Bob Blakely said. "We are working diligently on 2003 and are in the process of auditing the results and preparing the filings. We will review all of our filings to ensure accuracy, quality and transparency."

MCI's delay comes as the telecom sector enjoys the beginnings of a long-awaited revival from a deep slump, and it confronts emerging threats such as voice-over-the-Internet technology. The company's chief executive, former Compaq head Michael Capellas, told investors Tuesday that telcos must embrace these new challenges unless they want to see their business taken by rivals.

Previously known as WorldCom, the company collapsed in the summer of 2002 under some $11 billion in bookkeeping missteps. WorldCom's demise became the nation's largest-ever bankruptcy case, and prosecutors have been seeking to bring charges against its former top officers.

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