- Three out, including city administrator, at Scott City; two resigned, one fired (3/16/17)1
- Business notebook: Cape native goes from farm to mobile-food operation (3/20/17)1
- Police: Man beats pregnant wife, throws her down stairs, abandons her on side of road (3/14/17)17
- Several tournaments already booked at Sportsplex (3/16/17)6
- Cairo man pleads guilty to bank murders (3/17/17)1
- Former Scott City administrator: 'I was forced to resign' (3/21/17)6
- Two people found dead in Advance house fire (3/21/17)
- Two local lawmakers back charter school bill; Perryville lawmaker objects to measure (3/19/17)19
- Two Cape men charged with second-degree murder of Grandi (3/21/17)2
- Cape's 24-hour endurance run keeps growing; some will run more than 100 miles beginning Friday night (3/15/17)1
Judge approves outside examiner in WorldCom case
NEW YORK -- The federal judge overseeing the WorldCom bankruptcy case approved the appointment Monday of an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.
U.S. Bankruptcy Judge Arthur Gonzalez granted the Justice Department's request after approving $2 billion in financing to keep WorldCom operating as it reorganizes its finances.
The examiner would have the power to request documents detailing the company's transactions. WorldCom has agreed with the request, according to court documents.
John Byrnes, a lawyer with the U.S. trustee's office, said after the hearing that it was important to have someone with no vested interested in WorldCom.
"We're going to get a guy who's disinterested and on the job and off we go," he said.
Gonzalez must approve the person selected for the post.
Daniel Golden, a lawyer representing several WorldCom bondholders objected to the appointment, saying it would further entangle the WorldCom case.
There was no clear signal in the opening bankruptcy hearing, held Monday in federal court in New York, as to whether WorldCom's major lenders and bondholders favored a restructuring of the $41 billion debt they are owed rather than the sale of major assets.
Most of the hearing was dominated by procedural matters such as the $2 billion interim financing agreement approved by Gonzalez, who also is overseeing the Enron Corp. bankruptcy.
Before WorldCom's bankruptcy filing Sunday night, Enron was the largest in U.S. history.
The Justice Department also is conducting a criminal investigation into the downfall of WorldCom. The results of that probe would only be made public if the government brings charges against the company.
The Securities and Exchange Commission, citing "accounting improprieties of unprecedented magnitude," last month filed civil fraud charges against WorldCom, a day after the company disclosed a nearly $4 billion hole in its books.
Attorney General John Ashcroft said an independent examiner "will provide transparency to the process and enhance accountability."
"In turn this should increase public confidence in the conduct of the case and help preserve value and protect the creditors and shareholders, including small creditors and those whose pension funds are invested in WorldCom," he said.
Accountable to court
The request for an examiner indicates the government believes that step is needed to protect WorldCom shareholders' interests through the bankruptcy process. An examiner, who would be accountable to the court and not the creditors' committee, was appointed in the Enron case to investigate the energy-trading company's collapse.
An examiner also can turn over relevant material to the Justice Department if this person discovers activities by company executives believed to warrant investigation.
Clinton, Miss.-based WorldCom admitted June 25 that it falsely accounted for $3.85 billion in expenses, which inflated profits. That day, it fired chief financial officer Scott Sullivan, who was subsequently accused by the company's auditor, Arthur Andersen, of withholding crucial information about WorldCom's bookkeeping.
WorldCom's stock price traded as high as $64.50 in June 1999 but is now virtually worthless.
The $107 billion in assets that WorldCom reported in its bankruptcy filing might not fetch even 20 cents on the dollar in the current climate, according to industry estimates.
"One of the interesting dilemmas in this situation, where you have an entire industry in trouble, is that some of the most likely buyers of something like MCI might not be in a position to buy," said David Skeel, a professor of corporate law at the University of Pennsylvania.