For a time, WorldCom (WCOM) was the United States' second largest long distance phone company (AT&T was the largest). WorldCom grew largely by acquiring other telecommunications companies, most notably MCI. It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone. It was based in Clinton, Mississippi.
On November 10, 1997, WorldCom and MCI announced their US$37 billion merger to form MCI-WorldCom, making it the largest merger in US history.
In June 2002, an internal audit discovered that US$3.8 billion had been 'miscounted.' The US Securities and Exchange Commission launched an investigation into these matters on June 26, 2002. (See accounting scandals.)
On July 21 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history. Its CEO and founder, Bernard Ebbers, came under fire for his failure to prevent the bankruptcy.
In August 2002, an additional $3.3 billion in improper accounting since 1999 was announced. By the end of 2003, it was estimated that the company's assets had been inflated by around $12 billion.
In May, 2003, the company was given a no-bid contract by the United States Department of Defense to build a cellular telephone network in Iraq. The deal has been criticized by competitors and others who cite the company's lack of experience in the area.  (http://seattlepi.nwsource.com/business/123016_worldcomiraq22.html)
The company emerged from Chapter 11 bankruptcy in 2004 with a new name, MCI, and about $5.7 billion in debt and $6 billion in cash. About half of the cash was intended to pay various claims and settlements. Previous bondholders ended up being paid 35.7 cents on the dollar, in bonds and stock in the new MCI company. The previous stockholders' stock was valueless.
Under the bankruptcy reorganization agreement, the company paid $750 million to the SEC in cash and stock in the new MCI, which was intended to be paid to wronged investors.
WorldCom (now MCI) has yet to pay its creditors, who have waited for 2 years for a portion of monies owed. Many of the small creditors include former employees, primarily those who were laid off in June 2002 and whose severance and benefits were withheld when WCOM filed for bankruptcy. A group of some of these employees have formed the exWorldCom5100 group (http://www.exworldcom5100.com).
- Website by former WorldCom employees seeking full severance pay and benefits (http://www.exworldcom5100.com/)
- HavenWorks' WorldCom News (http://www.HavenWorks.com/business/research/worldcom)
- Forbes article on WorldCom scandal (http://www.forbes.com/home/2002/06/26/0626topnews.html)
- BBC News - WorldCom files for bankruptcy (http://news.bbc.co.uk/hi/english/business/newsid_2143000/2143217.stm)
- Analyst Coached WorldCom Chief on His Script (http://www.nytimes.com/2003/02/27/business/27TELE.html), The New York Times, February 27, 2003
- CFO Magazine, April 21, 2004, "MCI Emerges from Bankruptcy" (http://www.cfo.com/article/1,5309,13378%7C%7CT%7C1161,00.html?f=TodayInFinance_Inside)