Judge says WorldCom can pay $36 million more to fired workers

Bankruptcy court, creditors committee back added severance

October 02, 2002|By BLOOMBERG NEWS

NEW YORK -WorldCom Inc. won a federal bankruptcy judge's approval yesterday to pay an additional $36 million in severance and other payments to 4,000 workers fired as the second-biggest U.S. long- distance phone company spiraled into insolvency.

WorldCom has paid $22 million in severance since July, when it made the largest bankruptcy filing in history. Fired workers received up to $4,650 each under a limit set by U.S. bankruptcy law. Many former WorldCom employees complained that they received less than they were owed.

Last month, WorldCom sought court permission to exceed the $4,650 limit. The additional severance payments approved yesterday by U.S. Bankruptcy Court Judge Arthur Gonzalez include severance still owed, unpaid commissions to its sales staff, vacation pay, medical benefits and expenses for which employees weren't reimbursed.

WorldCom and its bankrupt affiliates "have properly exercised their business judgment" in seeking to pay the additional severance, Gonzalez ruled at a hearing.

Ira Dizengoff, a lawyer for the WorldCom creditors committee, told Gonzalez that the panel supported the additional severance payments.

Kate Lee, a former WorldCom manager for internal communications, expressed satisfaction with the ruling but said issues surrounding the severance payments haven't been resolved.

"The questions now are when and how much," Lee said. "WorldCom has never told anyone how much they owe us."

Lee said WorldCom wanted to pay fired workers in installments, a plan she called unacceptable.

"It extends the agony that these people are going through," Lee said. "WorldCom has substantial cash. Why are they holding back?"

WorldCom sought Chapter 11 protection in July from creditors owed more than $41 billion, after disclosing that it had hidden $3.85 billion in expenses to mask losses. The company later revealed an additional $3.1 billion in misstated results, bringing the total misreported to about $7 billion since 1999.

A federal grand jury has indicted Scott Sullivan, WorldCom's former chief financial officer, and Buford Yates, its former director of general accounting.

Enron Corp., which in December filed what was then the largest Chapter 11 bankruptcy, agreed in May to pay $28.8 million in severance to more than 4,200 workers fired by the Houston energy trading company in the wake of its downfall.

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