WASHINGTON-Long before WorldCom Inc. admitted to billions in accounting fraud, it was trying to become a major wireless carrier by reselling service from Verizon Wireless. As part of that scheme, Verizon Wireless resold some of WorldCom’s telecommunications services.
Then the tech bubble burst, and WorldCom imploded and went bankrupt. It’s first course of action after declaring bankruptcy-get out of wireless.
That was the end of the story until the Dow Jones Newswire reported that Aug. 22 WorldCom made a filing with its bankruptcy court saying it had settled an outstanding dispute with Verizon Wireless.
What?
It seems WorldCom and Verizon Wireless each claimed the other still owed it money from before the bankruptcy filing, and Verizon also believes it is owed money post bankruptcy.
In what appears to be crazy math, Verizon Wireless would pay WorldCom $4.7 million to satisfy the $46.2 million WorldCom believes it is owed but WorldCom will not pay anything. Instead Verizon Wireless will have a $7.6 million general unsecured claim to be paid according to its plan of reorganization.
Parties objecting to the filing have until Thursday to do so. The bankruptcy judge has scheduled a hearing for Sept. 2.
WorldCom is now doing business as MCI. In addition to SkyTel Paging, MCI recently won a contract to provide mobile-phone service to government and military officials in Baghdad.
MCI hopes to soon emerge from bankruptcy. Richard Breeden, the former chairman of the Securities and Exchange Commission which has been reviewing WorldCom’s business practices, said he doesn’t think the recent allegations from Verizon Communications Inc. and AT&T Corp. that MCI-both before and after its merger with WorldCom-illegally routed calls will delay the process.
