US telecoms firm MCI [MCWEQ.PK], formerly known as WorldCom, has been given the go-ahead to emerge from bankruptcy protection.
Despite WorldCom being classed as the biggest corporate failure in US history, a court approved the firm’s restructuring policy that will permit it to continue operating as a going concern once legal protection from its creditors is withdrawn.
The plan includes a reorganisation of its finances that wipes out $35 billion in debt by limiting payouts to creditors to $0.36 for every dollar owed. The ruling comes 16 months after the company collapsed, after admitting that it had inflated profits by about $11 billion.
Although MCI stressed that it had undergone complete transformation since going bust, it is still likely to face tough times ahead.
Despite recent events, MCI is still the second-biggest provider of long-distance telecommunications in the US, but that will not prevent it from having to fight for market share in a sector where price wars are the order of the day.