Judge Approves WorldCom Settlements With AOL, SBC Unit
04/22/2003 15:28
Nicholas P. Braude Dow Jones Newswires
WASHINGTON -- The judge overseeing WorldCom Inc.'s (WCOEQ) Chapter 11 bankruptcy case Tuesday approved settlement agreements with AOL Time Warner Inc. (AOL) and a unit of SBC Communications Inc. (SBC).
Judge Arthur J. Gonzalez of the U.S. Bankruptcy Court in Manhattan signed an order that authorized WorldCom and AOL Time Warner to settle amounts owed to each other under existing contracts.
Court papers said AOL Time Warner has agreed to pay a total of about $15.9 million for amounts owed under contracts before WorldCom filed for bankruptcy July 21, 2002. WorldCom filed for Chapter 11 bankruptcy protection after facing $41 billion in debt and an inability to tap capital markets because of an accounting scandal.
The $15.9 million will also include amounts that WorldCom's MCI WorldCom Communications Inc. subsidiary overpaid for prepetition advertising services under a 2001 promotional agreement, WorldCom's motion from March 28 said.
The motion said AOL Time Warner owes MCI WorldCom Communications a total of about $28.9 million, but the WorldCom subsidiary also owes AOL Time Warner for advertising under the promotional agreement.
The parties haven't determined the exact amount owed to AOL Time Warner under the advertising promotional contract, but they agree it's expected to be about $13.1 million, according to the motion. The settlement will set off the estimated $13.1 million owed by MCI WorldCom Communications under the promotional agreement against the $28.9 million total owed by AOL Time Warner.
In another order, Judge Gonzalez approved a pact under which WorldCom and Pacific Bell Telephone Co., a unit of SBC Communications, will settle some disputes related to a contract with California state for payphones and related services at some California prisons and correctional facilities.
The settlement with Pacific Bell Telephone calls for the SBC Communications unit to pay MCI WorldCom Network Services Inc., another WorldCom unit, $2.6 million owed for July 22, 2002, through Jan. 31 as commissions, management fees and phone maintenance fees for inmates of prisons and correctional facilities.
WorldCom recently changed its brand name to MCI, but the company continues to file documents in bankruptcy court and with the Securities and Exchange Commission as WorldCom Inc.
-Nicholas P. Braude, Dow Jones Newswires; 202-628-7686 |
