The Bankruptcy of WorldCom WorldCom Inc. was one of the largest companies to file...

The Bankruptcy of WorldCom

WorldCom Inc. was one of the largest companies to file for bankruptcy. This case requires the analysis of WorldCom’s December 31, 2002, 10-K filed with the Securities and Exchange Commission. The 10-K can be obtained through EDGAR ( www.sec.gov ) or some other publicly available source.

( Note: After its emergence from bankruptcy, WorldCom was merged into MCI, Inc.; however, that did not affect WorldCom’s financial reporting for periods prior to the merger.)

Required

Provide responses to the following by referencing the section(s) of the 10-K where you found the information.

a. At what date and under which chapter of the Bankruptcy Code did WorldCom file?

b. Briefly discuss several reasons WorldCom filed for bankruptcy at that time.

c. Describe WorldCom’s major accounting irregularities prior to its bankruptcy.

d. After the bankruptcy filing, WorldCom performed an extensive review and restatement of its consolidated financial statements for the two years prior to the bankruptcy. List the major

c ategories and amounts of these restatements for each of the two years.

e. Describe the company’s financial accounting and reporting during the reorganization period. Include in your answer a brief discussion of the meaning of the title Debtors-in- Possession at the top of each of the company’s financial statements during the reorganization period.

f. Briefly discuss the form of accounting the company used as it emerged from bankruptcy.