AT&T; Drops Objection to WorldCom Reorganization

AT&T; Corp. agreed Monday to drop its objection to WorldCom Inc.’s plan to exit bankruptcy protection but said it would pursue allegations of improper call routing in another court.

The companies announced the agreement in a filing with the Bankruptcy Court in Manhattan overseeing Ashburn, Va.-based WorldCom’s restructuring. WorldCom also won approval for the plan from creditors who were entitled to vote on it again after the company settled with dissident bondholders.

The agreement with AT&T; removes one of the final obstacles to WorldCom’s plan for emerging from Chapter 11. This week, Bankruptcy Judge Arthur Gonzalez could rule on WorldCom’s plan to emerge from its July 2002 bankruptcy filing, the biggest in U.S. history, around the end of this year.

AT&T; and WorldCom still must reach agreement on money owed to each other for services provided before WorldCom’s bankruptcy, unrelated to the call-routing dispute, said AT&T; spokesman Jim Byrnes.

WorldCom has reached agreements lifting the objections to its reorganization plan of other rivals including Verizon Communications Inc. and SBC Communications Inc., the two biggest U.S. local-telephone companies. Verizon and SBC also have accused WorldCom of improperly evading access fees.

WorldCom has denied wrongdoing.

Gonzalez will rule Oct. 21 whether a racketeering lawsuit AT&T; filed against WorldCom last month can proceed in a U.S. District Court in Virginia. AT&T; alleges it was tricked into paying network-access fees owed by WorldCom.

WorldCom, the No. 2 long-distance company, is changing its name to MCI after an $11-billion accounting scandal that led it into bankruptcy.