A two-week hearing into whether WorldCom can emerge from
bankruptcy starts in New York today.
If all goes as expected, there could be a ruling by early next
month, according to Alfredo Perez, an outside bankruptcy attorney
representing the carrier.
WorldCom, now operating as MCI, expects to begin presenting its
case with opening statements and will then call about 12 witnesses,
Perez said. He did not identify those witnesses but said that chief
executive officer Michael Capellas was not expected to testify
during the first week of the hearing.
The hearing could last as long as three weeks, depending on how
long WorldCom's witnesses are questioned by "objectors" - those
parties, primarily businesses, which object to WorldCom's plan for
recovering from bankruptcy and being confirmed as a reconstituted
business.
Despite WorldCom's admissions last year of accounting
irregularities totalling $11bn, the bankruptcy hearing will
not delve into those issues and is expected to focus instead on
what WorldCom's creditors deserve to receive for past debts, Perez
said.
For example, WorldCom must prove that creditors will receive
more money under the Chapter 11 bankruptcy process than they would
under the more severe Chapter 7 process.
WorldCom must also prove that its consolidation plans are
feasible.
Many parties have come forward to object to WorldCom's emergence
from bankruptcy, which generally means they want more compensation
for debts WorldCom owes, Perez said. "In every single bankruptcy
case, people always want a little more."
Contrary to news reports, only a small part of the hearing will
be devoted to objections by AT&T that WorldCom defrauded it
and other customers with a call routing scheme. "It's not a hurdle
at all," Perez said.
AT&T has also levelled those fraud charges in a Virginia
court.
Anastasia Kelly, general counsel for WorldCom, said an internal
probe into call routing processes is still under way, and she could
not offer a date when that investigation will conclude. She
reiterated past WorldCom statements that it has in no way
compromised national security by routing calls through Canada and
that the routing is legal. She said only 8% of WorldCom's traffic
travels over connections arranged by third parties.
"We are going to do the right thing," she said about the probe,
which is looking into 10 years of call routing behaviour.
Matt Hamblen writes for Computerworld