Federal regulators have launched an investigation into creditor actions in the WorldCom bankruptcy, demanding thousands of documents from bondholders related to the largest US bankruptcy, according to court documents.
The US Securities and Exchange Commission investigation is focusing in particular on the actions of one WorldCom creditor, a New York investment firm named Blue River Capital, one person familiar with the investigation told Reuters.
Blue River declined to comment on any SEC matters. Its founder, Van Greenfield, was previously co-chairman of the WorldCom creditors committee.
The exact nature of the SEC investigation could not be determined. One source said the probe is not related to WorldCom, which changed its name to MCI after emerging from bankruptcy protection in April.
The SEC declined to comment on the request, as did MCI and lawyers for Akin Gump Strauss Hauer & Feld, a New York law firm that represents the committee.
WorldCom, one of the largest US phone carriers, sought Chapter 11 bankruptcy protection in July, 2002, burdened by billions of dollars in debt from an acquisition spree and multiple fraud charges against senior executives. Much of the bondholder debt was converted to equity following the bankruptcy.
As part of its emergence, MCI settled fraud charges by the SEC and paid $750 million in cash and stock. Earlier this year, the SEC asked MCI for information regarding state tax shelters set up by accounting firm KPMG.
The SEC in early July issued subpoenas from 11 current members of the WorldCom Official Committee of Unsecured Creditors, the court-appointed bondholder committee, according to an Aug. 24 filing in the US bankruptcy court in New York.
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