What is the significance of the fact that the Trustee did not appoint an equity committee for WorldCom/MCI?
The proposed reorganization plan, which heavily favors bondholders and company management, is a direct result of the fact that an equity committee was not appointed. The plan was created in secret meetings that were conducted by the bondholders and company managment. Stockholder representatives were not allowed to attend or offer input to these meetings. The bondholder/management meetings resulted in a plan which favors bondholders and company management. If an equity committee had been formed and equity committee lawyers attended the meetings, there is a possibility that the stockholders would have gotten better treatment in the plan that resulted from the meetings. Return to top.
