Bankruptcy Judge Approves Worker Retention Plan
US Bankruptcy Judge Arthur Gonzalez also gave New York State Comptroller Carl McCall permission to look at WorldCom documents turned over to investigators, which the company had refused to release, according to a Wall Street Journal report.
The retention plan covers 329 employees, who will receive bonuses ranging from $20,000 to $125,000 to convince them to stay with the company while it goes through bankruptcy proceedings, the Journal said.
WorldCom, which filed for bankruptcy protection in July after revealing accounting fraud that now tops $7 billion, hopes to emerge from bankruptcy in the middle of next year.
Gregory Rayburn, WorldCom’s chief restructuring officer, testified that the plan is necessary because competitors are trying to hire the company’s best employees, and because morale has suffered in the wake of the bankruptcy and investigations, according to the WSJ. Richard Breeden, the court-appointed monitor in the WorldCom case, had approved the plan earlier.
Representatives from affiliates of SBC Communications Inc. objected to the retention plan, arguing that the company hadn’t proven that employees would leave the company and that there is a dearth of jobs in the slumping telecommunications industry.
Gonzalez’s approval of McCall’s request for access to company documents represents only a first step, however.
Lawyers representing McCall still need permission from US District Judge Denise Cote, who has appointed the state’s pension fund as responsible for leading the prosecution of civil claims on behalf of investors who purchased WorldCom securities over the past three years, the Journal said
McCall has been appointed as the lead plaintiff in a securities class-action suit related to the collapse of WorldCom’s stock as trustee of the state’s $112 billion retirement fund.
He is seeking damages from dozens of defendants, including Citigroup Inc., former Salomon telecommunications-stock analyst Jack Grubman, former WorldCom Chief Executive Bernard Ebbers, and former WorldCom auditor Arthur Andersen LLP, among others.
The fund says it paid more than $300 million for WorldCom shares that are now worthless.