Worldcom Files For Chapter 11 Protection

Chief executive John Sidgmore told the Associated Press that the company had received $2 billion in financing, and that would help stabilize the business.

The decision to file for bankruptcy had been widely anticipated. WorldCom admitted June 25 that it falsely accounted for $3.85 billion in expenses, which had the effect of inflating profits. The company also announced that it would lay off 17,000 workers, or 20 percent of its global work force.

The bankruptcy filing will likely have a ripple effect on the telecom industry.

For suppliers and creditors, it's the possibility that WorldCom's debts might be wiped away by a bankruptcy judge.

For competitors, it's the pain of losing investors fleeing all things telecom.

For WorldCom's 63,000 workers, there are acute worries about future employment.

The one group that probably won't have to worry is WorldCom's telephone customers. Even if the company fails, authorities say its networks will keep operating until they are sold, or while the company works out its troubles.

Wall Street is bracing itself for what is expected to be a difficult week. Even after the 390-point plunge Friday that took the Dow Jones industrials to their lowest close in nearly four years, many analysts say a brief bounce higher on bargain hunting is the best the market is likely to get and more losses Monday are still a strong possibility.

They say investors, fed up with accounting scandals and shrinking portfolios, have lost faith in the market.

In an appearance Sunday on NBC's 'Meet the Press,' New York Stock Exchange Chairman Richard Grasso said that Monday could be another difficult day for the markets, but counseled investors to remain patient.

'Please don't do something that emotionally feels good but, in the long term, will be a mistake,' he said. 'What I know is, over the course of the last 10 years, the market, with all of the aberrational downdrafts that we've seen, has gone up, and I believe over the next 10 years the same will be true.'