More than six months after its emergence from bankruptcy, WorldCom still seems to have a world of trouble.
Judge Jed Rakoff of the Southern District of New York has ordered the company, now known as MCI Inc., to stop paying law, accounting, and consulting firms that have not already been approved through a court-sanctioned budgeting system, according to the New York Law Journal. MCI has already spent $800 million on matters associated with its emergence from bankruptcy, the Law Journal pointed out, and since then it has been billed for hundreds of millions more.
Under Judge Rakoff’s budgeting process, firms were required to submit quarterly budgets to MCI’s corporate monitor, Richard Breeden. The paper noted that Breeden ended his review of those budgets on June 30, when the company emerged from bankruptcy.
Problems surfaced after several firms — which the judge did not identify — submitted payment requests that exceeded their quarterly budgets or that had never received budgetary approval from Breeden, according to the Law Journal. Other firms may have received payments that exceeded their submitted budget, the paper added.
“Effective immediately, the company and each of its employees is barred, upon pain of contempt, from making any further payment whatever for any services or fees within the scope of the budgeting order that were not previously approved by the corporate monitor,” Rakoff reportedly said. He also directed Breeden to recoup any wrongly made payments.
An MCI spokesman told the Law Journal that the company would comply with the judge’s demand to explain the bills but declined to offer details.