|  | | 2005 News and Press Releases | | |
SETTLEMENT NEWS:
Court Sets Aside Settlement By Worldcom's Directors
Michael Bobelian – New York Law Journal
Law.com. February 3, 2005
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EXCERPT: The $54 million settlement between class action plaintiffs and 10 former WorldCom directors collapsed Wednesday. Southern District of New York Judge Denise Cote rejected a provision of the agreement that would have limited the ability of the non-settling parties to reduce the amount they would have to pay should they be found liable by a jury. Cote issued a one-page order that did not explain her reasoning. That will come when she issues an opinion. Despite the brevity of the order, it may have far-reaching consequences. WorldCom filed for bankruptcy in 2002 amid news that it had committed an $11 billion accounting fraud. It emerged last year under its former name, MCI, after shedding billions of dollars in debt. Its former CEO, Bernard Ebbers, is currently on trial facing multiple counts of securities fraud and related actions. Other former executives have pleaded guilty to similar violations. In early January, 10 former directors settled shareholder suits agreeing to pay $18 million out of pocket, and their insurers agreed to pay another $36 million. The settlement came as the parties were preparing for trial set to begin on Feb. 28. The remaining defendants were underwriters of WorldCom bonds issued before the company failed. They were accused of failing to fulfill their duty to learn of and disclose the problems. Of the lead underwriters, Citigroup had settled last year, paying out $2.5 billion to injured shareholders and bondholders. |
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