WorldCom could file its widely anticipated restructuring plan as soon as Monday evening, say people familiar with the company.
The filing, to be made with the U.S. Bankruptcy Court in Manhattan, will coincide with the relaunch of the scandal-ridden telco as MCI, as
reported Thursday. As part of the relaunch, WorldCom will move its headquarters to Ashburn, Va., from Clinton, Miss., a locale now associated with former CEO Bernie Ebbers and the accounting debacle that brought him down.
In addition to showing the court a viable business plan, WorldCom must settle some $30 billion worth of claims with various creditors, according to people familiar with the pending move. If all goes well, the company expects to be able to emerge from Chapter 11 as early as September.
WorldCom has indicated that it would have a restructuring plan ready by next week, and new CEO Michael Capellas has shown every intention of hitting that target. Capellas hosted a
briefing with select industry analysts Thursday in the Ashburn offices.
If the company is able to emerge from bankruptcy this year, it will have succeeded in making an extremely swift turnabout, considering the company's size and reach.
WorldCom collapsed last summer after a series of revelations about its bookkeeping. The company fired founder Ebbers just months before it filed for the largest-ever U.S. bankruptcy. To date, the company has fessed up to some $10 billion in accounting misdeeds.
Under Capellas, the former CEO of Compaq, WorldCom has swallowed an
$80 billion writedown to shrink its balance sheet while undertaking some drastic payroll-trimming measures. Lately, though, the company has shown remarkable progress on the financial front. WorldCom
swung to a profit in January, posting net income of $155 million on revenue of $2.17 billion. That compares to December's $580 million loss on $2.2 billion in sales.
All eyes in the battered telecom industry will be on WorldCom's postbankruptcy performance. With its once-heavy debtload having been reduced substantially, WorldCom looks like a leaner and more formidable competitor than ever -- a scary prospect for an industry beset by instability.