Bankruptcy of Washington Mutual and WorldCom

Bankruptcy of Washington mutual and WorldCom

Bankruptcy of Washington mutual and WorldCom

What is Bankruptcy?

Essentially, bankruptcy is a legal process whereby the debtor officially declares their inability to repay their debts. It offers certain legal protection to the declarer and has important ramifications for both creditors and debtors. The bankruptcy act has strict rules when it comes to declaring yourself bankrupt. There are two fundamental ways in which an individual or business can be made bankrupt - both voluntarily, by completing and filing the appropriate paperwork, or involuntarily, by order of a court.

About the Company

WorldCom, the second long-distance telephone in the U.S, accounting malfeasance revealed in June 3000 for $ 800 million and joined the list of companies that falsified information, such as Enron, Andersen, Xerox, Qwest, Tyco, Dinegy, The Paso Corp. "If, we can emerge from bankruptcy without the burden of debts can have a strong position in the industry.

This explains that, plans to obtain 2 billion dollars in funding that would allow it to keep operating under bankruptcy reorganization, and said the bankruptcy does not include international operations(Todd, 2005). WorldCom, which has 85 000 employees and operates in 65 countries, aims to emerge from a stronger balance sheet in a period of approximately 9 to 12 months, he added. The corporation will now try to restructure the debt of 32 thousand 800 million dollars, classified as junk, leaving businesses that are not their specialty and focus on other keys.

Sidgmore said, recently the company's survival is a matter of "national security" because it "plays an important role in the telecommunications infrastructure of the United States" with 20 million customers and is the largest Internet provider. The bankruptcy of WorldCom easily exceeds that declared by the energy giant Enron last December. While WorldCom had 103 thousand 800 million dollars in assets on 31 March, according to document the Securities and Exchange Commission (SEC), Enron was only 63 000 to $ 400 million when it filed for bankruptcy. According to the Journal, the persistent rumors about bankruptcy of WorldCom capitalization declined last to 280 million. The company announced that, it will freeze assets of 80 days in exchange for temporarily stop, the legal actions of a group of banks trying to recover loans 2 000 500 million dollars. At least 25 banks contend that WorldCom commit fraud one month before the accounting irregularities revealed (Zywicki, 2005).

Justice of New York had refused to take a resolution to the credit freeze, but agreed to consider the request of banks. The identification of banks to prevent WorldCom agreed to these funds would be a trigger for the company management decided to avail him of the bankruptcy law. Sidgmore, who revealed accounting manipulations, had said last week that it was difficult to avoid bankruptcy and that the group held intensive discussions with its creditors on ways to avoid it.

The fall of a giant

This company after twelve years acquired LTD voice and data transmission, Williams Telecommunications Group ...