WorldCom Lashes Back
Following a number of allegations concerning the improper routing of traffic so as to avoid regular interconnection charges (see last week's roundup, Chapter II), the carrier's creditors, desperate to keep the operator as stable as possible and maximize their chances of some financial returns, have struck out at WorldCom's rivals. The official committee of unsecured creditors has challenged the likes of AT&T Corp. (NYSE: T), SBC Communications Inc. (NYSE: SBC), and Verizon Communications Inc. (NYSE: VZ) to produce evidence of WorldCom's wrongdoings or keep quiet. They believe the other operators are deliberately trying to further discredit and destabilize WorldCom in the weeks preceding the planned review of its financial reorganization by the bankruptcy court (due September 8).
In a bankruptcy court filing, these creditors claim that the accusations leveled at WorldCom are a "smear campaign" that has "led to widespread adverse press coverage about the company quite clearly aimed at imperiling these cases and frightening the company's customers into the arms of its accusers." As a result, the creditors want to subpoena documents and examine witnesses concerning the allegations. In addition, they want access to any communications between AT&T, SBC, and Verizon that might reveal any cooperative efforts to smear WorldCom.
Not only that, but they want these documents by September 4, in an effort to prevent the repetition of the claims in question. The creditors also say they may use any evidence they find as the basis for future legal proceedings against AT&T, SBC, and Verizon. The trio of rivals are playing it cool: AT&T and SBC say they have already provided documented evidence of WorldCom's rerouting practices to the bankruptcy court and the U.S. Department of Justice, respectively. Verizon is keeping mum.
To read the full story, on our sister site Boardwatch, simply click here. — Ray Le Maistre, International Editor, Boardwatch