I love the subtext of the opening line of The Wall Street Journal's story today about the raft of bad news coming out of telecommunications carrier Global Crossing (NASDAQ:GLBCE). "Just five months after it emerged from Chapter 11 protection, former stock-market powerhouse Global Crossing Ltd. released a torrent of bad news yesterday." Note that the Journal doesn't bother to call it a "telecommunications powerhouse," or even identify it as a telecom company. Instead, it perhaps unintentionally recognizes Global Crossing for what it was: a creation of an irrational stock market.

Yesterday, Global Crossing disclosed that it would have to restate its financial results for 2003, review its 2002 books, and back away from its projections for the current year after concern from management that it was understating its expense of accessing other companies' networks (the single largest expense the company has).

Keep in mind that all of this took place while the company was in bankruptcyprotection. Such companies have to make their creditors comfortable with their potential for profitability, or else the company may not be able to emerge. Every single one of the creditors, the trustees, and the accountants missed a misstatement of the single largest expense during a time when the financial statements would have been under incredibly close scrutiny. And yet they all missed it, and a company that filed Chapter 11 after its books were found to be hard-boiled has just blown it again.

In January, I noted with no small amount of acid that Global Crossing's emergence from bankruptcy was something "the telecommunications industry doesn't need." I received a note following this piece from investor relations folks at the company hoping to change my mind. After the most recent revelations, I think I'll stand pat on this assessment.

The last time around, Global Crossing turned equity with a market cap of $80 billion into nothing as the shares were cancelled on emergence from bankruptcy. This time around, the company's new shares have lost 65% in the three months since it began trading again. Furthermore, Global Crossing has stated that it will run out of money by the end of the year if it cannot secure additional funding and a reduction in the nearly $2 billion access cost budget, which was a prime component of the company's improved financial projections.

Global Crossing has some big backers, including 61% owner Singapore Technologies Telemedia and Telmex (NYSE:TMX) chairman Carlos Slim, but both are going to have to be satisfied with the restatement before they open up their checkbooks again, because they both missed something very, very big during the bankruptcy process. If Global Crossing goes Chapter 22, I don't think they'll be willing to stay tuned.

Bill Mann owns none of the companies mentioned in this article, but he might be willing to trade his Mott the Hoople albums in consideration. Have you considered Hare Krishna? How about dividend-paying stocks? Try a free trial for Mathew Emmert's Motley Fool Income Investor today!