New York, Aug 16: A US bankruptcy court judge has given companies who partner with fallen telecom giant WorldCom to provide service to customers a better chance at getting paid on time.
Judge Arthur Gonzalez of the Southern District of New York late on Wednesday approved a plan to place third on the list of creditors the telephone, power and other companies whose services are critical for WorldCom, the No 2 US long-distance provider, to continue operating.

Chapter 11 bankruptcy protection gives a company time to reorganise while it keeps creditors at bay. However, it does prioritise who is paid with the funds available.

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Gonzalez ruled that for services billed after August 14, the companies, known collectively as utilities, should be ranked third, up from fifth.

The utilities now follow the banks, who so far have provided $750 million in financing, enabling WorldCom to continue operating after it filed for bankruptcy July 21, and the companies within WorldCom itself.

WorldCom, which provides telecommunication services to 20 million residential and small business customers, 20,000 corporate and global customers and more than 470 other carriers, last month filed the largest corporate bankruptcy in history.
Earlier this week, WorldCom said that it had about $415 million in cash on hand as of August 2. Its accounts receivable - or the money its customers owe for service - totalled more than $4.5 billion.

Electricity, telephone, telecommunications, and other such services account comprise WorldCom's largest single expense, about $700 million a month, according to court documents. The company uses several thousand utilities and obtains service through more than 70,000 accounts.

Telecommunication providers link up with one another and allow traffic to be carried on each others' networks so that callers can communicate without regard to their individual telephone company.
Under the law, the telephone and power companies and other utilities are required to continue providing those crucial services for 21 days. If they don't find that the company's plan to provide assurance that it they'll get paid is sufficient, utilities can file objections with the court.

In WorldCom's case, utilities filed more than 128 objections.

In his ruling, the judge also accepted WorldCom's concession to provide its utilities with a weekly update on the amount of unrestricted cash it has and how much of the $750 million in post bankruptcy funding it has left. Bureau Report