2. Worldcom Inc; $103.91 billion
Founded in 1983 as LDDS Communications, Worldcom became America's second-largest long-distance company and the largest handler of Internet data. It is also the US's second largst bankruptcy ever at $103.91 billion!
WorldCom growth was fueled primarily through acquisitions during the 1990s and reached its apex with the acquisition of MCI in 1998.
On November 10, 1997, WorldCom and MCI Communications announced their $37 billion merger to form MCI WorldCom, making it the then largest merger in the US. On September 15, 1998 the new company, MCI WorldCom, opened for business. Later, in 2000, MCI WorldCom renamed itself 'WorldCom'.
WorldCom, plagued by the rapid erosion of its profits and an accounting scandal that created billions in illusory earnings, filed for bankruptcy on July 21, 2002.
Why it collapsed?
The company was found guilty of underreporting 'line costs' (interconnection expenses with other telecommunication companies) by capitalising these costs on the balance sheet rather than properly expensing them, and
Inflating revenues with bogus accounting entries from 'corporate unallocated revenue accounts'.
Image: The exterior of the headquarters of WorldCom Inc in Clinton, Mississippi | Photograph: J D Schwalm/Getty Images
Also read: Google's amazing journey
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