WorldCom has eclipsed energy trader Enron after making the largest ever Chapter 11 bankruptcy protection filing in US corporate history.
Although WorldCom and its US subsidiaries are included in the filing, non-US subsidiaries are excluded and will continue to operate normally.
The company has arranged a $2bn line of credit, which will be used to supplement its cash flow during the Chapter 11 proceedings, although this is subject to approval by the Bankruptcy Court.
WorldCom is to use the protection to restructure its debt and get the company running again. But thousands of jobs will go as non-core assets are sold off to stabilise finances.
"Chapter 11 enables us to create the greatest possible value for our creditors, preserve jobs for our employees, continue to deliver top-quality service to our customers and maintain our role in America's national security," said president and chief executive John Sidgmore.
"We will use this time under reorganisation to regain our financial health and focus, while operating with the highest integrity. We will emerge from Chapter 11 as quickly as possible and with our competitive spirit intact."
The firm has also appointed two new members to its board: former US Attorney General Nicholas Katzenbach, and Dennis Beresford, professor of accounting at the Terry College of Business, University of Georgia.
The pair will sit on the committee reviewing the company's accounting practices
The $107bn carrier is facing a $3.85bn accounting scandal, and lists $41bn in debt, including $24bn in bonds.
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