Article Review Guide Worldcom

University of Phoenix Material

Article Review Format Guide

DATE: 2/2/2013

TO: (Mark Volansky)

FROM: (Debbie Drinkhorn)

RE: (WorldCom collapse the overview. New York Times)

ARTICLE SYNOPSIS

WorldCom was founded in 1983 as LDDS communications; it quickly became the nation's second-largest long-distance company and the largest handler of Internet data. WorldCom with its rapid erosion of profits filed the largest bankruptcy case in the history of the United States. The bankruptcy filing listed $107 billion in assets, way above those of Enron. Enron has over 20 million customers using the MCI long distance service. WorldCom disclosed that it had improperly accounted for more than $3.8 billion of expenses.

Due to this bankruptcy the shareholders, who once owned one of the world's most valuable companies, worth over $100 billion at its peak, are expected to be virtually wiped out. With the bankruptcy, control now passes instead to the banks and bondholders who financed WorldCom's growth.

Scott D. Sullivan, the chief financial officer, was fired by the board and David F. Myers, the financial controller, resigned. WorldCom was charged with fraud and the Justice Department has begun a criminal investigation of its business practices.

WorldCom's board elected two new members to replace Mr. Sullivan and Mr. Ebbers: Nicholas Katzenbach, who was a private attorney general in the Johnson administration; and Dennis R. Beresford, a former head of the Financial Accounting Standards Board and a professor of accounting at the Terry College of Business at the University of Georgia to try to regain some of its credibility.

LEGAL ISSUE

WorldCom Legal issues came about when there was a conflict of the actions or decisions of the accounting and book keeping of the...