Troubled carrier WorldCom announced Sunday it is filing for Chapter 11 bankruptcy.
Filing for Chapter 11 gives the company relief from creditors as it attempts to restructure following revelations of some $4 billion in accounting irregularities.
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"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," John Sidgmore, WorldCom president and chief executive officer John Sidgmore said in a statement.
. The company said that, in addition to the filing, it had secured some $750 million in temporary financing to tide it over during the bankruptcy proceedings, and that it has agreements with lenders to borrow up to $1.3 billion more.
On Thursday, WorldCom agreed to freeze certain assets in a deal with 25 banks that sued the company before the U.S. District Court for the Southern District of New York. The banks sued WorldCom in an attempt to recover a $2.65 billion unsecured loan they provided in May, but will now halt their legal efforts, according to the article in The New York Times.
WorldCom was valued at around $120 billion at its peak in the summer of 1999. Late last week, WorldCom's market capitalization had fallen to $280 million, the Journal reported.
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