Worldcom is searching for a restructuring expert to stabilise the scandal-hit telecommunications group as it prepares to file the largest bankruptcy in US corporate history.
The company and its advisers are understood to have been interviewing executives with experience of managing troubled companies in an effort to reassure customers and creditors and guide the company through what is expected to be a long and complex process. The restructuring expert will decide the fate of the company responsible for carrying half the world's internet traffic.
WorldCom, which at the beginning of the year held assets worth $104 billion (€102.5 billion), has outstanding debts of $32 billion. The company's lawyers were last night expected to start filing for Chapter 11 protection from creditors in a New York district court.
One person familiar with the company's thinking said: "Given that this bankruptcy is as big as the next two largest put together, and they have lost their chief executive and chief financial officer, they obviously need a restructuring expert."
The filing comes as investors anxiously awaited the reopening of world stock markets after a week of declines that drove the Dow Jones Industrial Average below its post-September 11 low.
The accounting and corporate governance worries sparked by WorldCom's sudden collapse and broader concerns about the quality of earnings have sparked a wave of selling that has raised fears that US investors are losing confidence in the stock market.
WorldCom's bankruptcy has been viewed as inevitable since the company last month shocked investors with a $3.9 billion accounting fraud. The filing is expected to include all its main US subsidiaries but exclude its international operations, which will continue to operate.
The bankruptcy will be followed by court hearings next week designed to approve the process and give the company access to emergency financing.
A consortium of lenders led by Citigroup and including JP Morgan and GE Capital was yesterday concluding a "debtor-in-possession" facility of up to $2 billion allowing WorldCom to continue to operate while in bankruptcy.
Once in Chapter 11, WorldCom is expected to try to reassure its corporate and retail customers that its data and long-distance services will be unaffected by the bankruptcy.
Many large corporations that rely on WorldCom for crucial internet and data communications are thought to be exploring the possibility of switching carriers.
The company is expected to present a new business plan to creditors after reviewing its accounts to adjust for the fraud. US Congressmen investigating the fraud have suggested it stretches back further than the beginning of 2001, as WorldCom has maintained.
The company is thought to be looking for an executive who could work alongside a management team dislocated by the departure of Mr Bernie Ebbers, chief executive, and the removal of Mr Scott Sullivan, chief financial officer, who is suspected of masterminding the fraud. WorldCom declined to comment yesterday.
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