MCI emerged from the era's largest Chapter 11, shed $35B of debt, then Verizon bought it

WorldCom, once the second-largest US long-distance carrier, filed for Chapter 11 in July 2002 after admitting to an $11 billion accounting fraud — the largest bankruptcy in US corporate history at the time, with debt of roughly $41 billion.

After 21 months under court protection, MCI emerged on April 20, 2004; the plan, confirmed on October 31, 2003, cut debt to about $6 billion, saving about $2.1 billion a year in interest payments, while the company kept a network spanning 150 countries and its largest enterprise customers.

New CEO Michael Capellas said the company emerged with a new board and management team, a sound financial position, unmatched global assets, a strong customer base and industry-leading service quality.

MCI then became the target of a bidding war between Verizon and Qwest in 2005; Verizon closed its $8.44 billion acquisition of MCI in January 2006, creating Verizon Business.

MCI emerged from the largest US Chapter 11 of its era with debt cut from $41B to about $6B, then was acquired by Verizon for $8.44B in 2006.

The reorganization plan converted most of the debt into equity for creditors.

The global network and enterprise customer base kept operating through the case.

Interest savings of about $2.1B a year made the reorganized company competitive.

The intact network made MCI attractive enough to trigger a bidding war.

A company can survive even the largest bankruptcy if its network and customers stay intact; the reorganized firm's assets set its sale price, not the scandal that forced the filing.

Verizon integrated MCI's global network and enterprise customers into a new Verizon Business division, completing the transformation of a scandal-torn telecom into the backbone of a larger competitor. The case is the benchmark for big Chapter 11 turnarounds: the bankruptcy wiped out shareholders and much of the debt, creditors became owners, and the underlying network retained enough value to command an $8.44 billion exit less than two years after emergence.