The meek may inherit the earth, but the complainers are going to have to settle for $250 million. Of course, that's substantially more than they had yesterday.
Under a settlement forged by the Securities and Exchange Commission, common equity shareholders of WorldCom will receive $250 million in stock when the company emerges from bankruptcy. The SEC said that the agreement would allow the victims of the massive fraud committed at WorldCom to participate in the potential upside of the reorganized company, to be called MCI.
This may or may not be palatable to the folks who have formed the various stockholder groups and organized various lawsuits, protests, and boycotts. (I kind of like the creativity, passion, and anger that went into boycottMCI.com.) One group suggested that the reorganization plan be "50% debt reduction, where the bondholders would get 50% ownership of the new company and the current stockholders would be given 50% equity in the new firm." This same group complained that the bondholders have completely dominated the bankruptcy committees.
The settlement amount is nowhere near what the stockholder group requested. It also remains to be seen just how the shares are allocated, since the fraud and damages took place over the course of years. As such, we will have to see whether they accept the settlement levels or press for more. But as the plan is offered now, old WorldCom shareholders will have defied the odds. After all, in almost every bankruptcy, the equity shareholders get nothing.
Now, it would be nice if the SEC sent some of the settlement money over to the shareholders of AT&T