Goldman to Refund $9.5 Million to MCI

In a case of what might be called too little, too late, MCI will recoup $9.5 million it paid to Goldman Sachs for advice just prior to filing for bankruptcy in the wake of a massive accounting fraud at the company then known as WorldCom.

Goldman was hired in 2002 to help with raising capital, arranging financing, discussing mergers and selling company assets, the Associated Press reported.

A settlement between Goldman and MCI was reached in December was approved yesterday by U.S. Bankruptcy Judge Arthur J. Gonzales, who is supervising MCI’s Chapter 11 proceedings in New York. MCI lawyer Alfredo R. Perez told the AP that Judge Gonzalez approved the settlement during a hearing Thursday.

Goldman reportedly agreed to refund the money. Federal law gives bankrupt companies some latitude in getting out of contracts and recouping some payments.

The $9.5 million may not seem like much to a company the size of MCI, but repositioning itself to one day emerge from bankruptcy has cost the company a fortune.

An audit report of professional fees in the company’s bankruptcy case was filed in federal court in November that shed light on the high cost of high stakes bankruptcy proceedings.

The company, which won a Gonzales’s approval for its reorganization plan in early November, has piled up fees at a rate of $10 million a month, according to The Washington Post.

The company is paying its own bankruptcy law firm as much as $3 million a month, but it is also required to pay for its creditors' lawyers and financial advisers, paying $150 million in fees during the past year. More than $40 million of that paid for the company’s investigation into the massive accounting scandal that led to the biggest bankruptcy case on record.

You may like these other stories...

How are you planning? What tools do you use (or fail to use) for forecasting? PlanGuru is a business budgeting, forecasting, and performance review software company based in White Plains, N.Y. AccountingWEB recently spoke...
Event Date: October 30, 2014, 2 pm ETMany Excel users have a love-hate relationship with workbook links. For the uninitiated, workbook links allow you to connect one Microsoft Excel spreadsheet to other spreadsheets, Word...
Event Date: September 9, 2014, 2:00 pm ETIn this session we'll discuss the types of technologies and their uses in a small accounting firm office. Included will be:The networked office: connecting everything together for...

Already a member? log in here.

Upcoming CPE Webinars

Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.