U.S. bankruptcy court judge Arthur J. Gonzalez tonight approved MCI's (Nasdaq: MCIT) plan of reorganization, setting the stage for the company's emergence from Chapter 11 (see MCI Reorg Plan Approved).

MCI listed $107 billion in assets and $41 billion in liabilities in its filing, making it the largest bankruptcy in U.S. history.

"This is a great day for MCI. Against all odds, we have reached our confirmation faster than anyone expected,” said Michael D. Capellas, MCI chairman and CEO in a prepared statement.

In the past ten months MCI has recruited seven new key executives -- including a CFO, a COO, a general counsel, and a chief ethics officer -- and has created a three-year plan for improving its margins and cash flow.

But what's most significant about MCI's reemergence, versus the hundreds of other telecom companies squeezing through Chapter 11, is the speed at which it has achieved it.

"They've done it in record time, whereas there's still no word on Enron's reemergence, and it filed earlier than MCI," says Shing Win, analyst with RHK Inc.. "One can only assume it will continue to operate at this pace," he says.

That said, even after its restructuring efforts, RHK notes that MCI’s margins and free cash flow are below those of its main rivals, AT&T Corp. (NYSE: T) and Sprint Corp. (NYSE: FON), despite a lower level of capital expenditures. Operational efficiency metrics also lag, as the company remains burdened with managing 222 separate subsidiaries.

— Jo Maitland, Senior Editor, Boardwatch