WorldCom filed for bankruptcy in 2002 after one of the largest accounting frauds in U.S. history.
The company entered Chapter 11 protection on July 21, 2002, listing assets of about $103.9 billion. At the time, it was the largest corporate bankruptcy ever recorded in the United States, although later failures surpassed it.
WorldCom executives improperly treated ordinary network operating costs as capital investments. That accounting treatment inflated profits by billions of dollars and concealed the company’s deteriorating financial condition. The scandal emerged after an internal audit and investigations by regulators and prosecutors.
WorldCom later changed its name to MCI after reorganizing. Chief executive Bernard Ebbers was convicted of fraud, conspiracy, and filing false documents, receiving a substantial prison sentence. The company’s collapse is sometimes mixed up with Enron, another major early-2000s accounting scandal, but the two were separate corporations in different industries.