Report: WorldCom May File For Bankruptcy By Monday

WorldCom The Wall Street Journal

The filing would be the largest bankruptcy in U.S. history. More than 50 percent of Internet traffic in the United States runs over WorldCom's Uunet backbone, and some 20 million Americans rely on WorldCom's phone service.

Earlier this week Federal Communications Commission Chairman Michael Powell expressed his concern over the dire situation, stating that WorldCom's debt-ladened condition leaves regulators little choice but to consider the merger of WorldCom and one of the regional telecom service providers.

Almost a decade ago, the U.S. government broke up the old Ma Bell local and long-distance monopoly to create an environment of fair competition among phone carriers.

But the merger of WorldCom and another provider is overshadowed by the possibility of the carrier, which is $30 billion in debt, filing for bankruptcy protection.

WorldCom representatives did not respond immediately to the possibility of filing by this Monday.

The news comes at a time when several reports have said that WorldCom's accounting discrepancies could date back to 1999.

Last month it was discovered that WorldCom inflated profits by hiding $3.8 billion in expenses during 2001 and first-quarter 2002.

WorldCom has since filed a suit against former controller Dave Meyers, who during a June 17 meeting with internal auditor Cynthia Cooper acknowledged that the company was violating accounting standards.

In the suit, filed with the Hinds County Circuit Court, WorldCom said it wants Meyers to pay back $795,000, the amount the carrier paid to retain his services.