Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Sarah R. Thomas is the assigned Administrative Law Judge in this proceeding.
Findings of Fact
1. The recommendations in the report entitled "Restoring Trust" will be enforceable against WorldCom and its successors by the District Court for the Southern District of New York. The Court will retain jurisdiction for however long it takes to make certain that the new controls and procedures recommended in the report are fully implemented and secured in the future.
2. WorldCom did not ask the District Court to exempt it from any of the recommendations in the "Restoring Trust" report.
3. The "Restoring Trust" report contains 78 individual recommendations. These cover the selection of directors; qualification, conflicts and independence standards for board members; the functioning of the board and its committees; establishment of the position of non-executive chairman; specific limits on compensation practices; equity compensation programs; accounting and disclosure issues; ethics and legal compliance programs; and other areas.
4. The "Restoring Trust" report's recommendations go beyond many legal requirements imposed on corporations by the SEC and other regulators.
5. The reorganization will not change rates, terms or conditions of service for WorldCom's California customers.
6. The Commission and the commissions of several other states have stipulated in the bankruptcy proceeding to use their best efforts to act on WorldCom's state applications no later than November 19, 2003. In return, we and the other commissions received written assurances from WorldCom that WorldCom would not press claims it had earlier raised that the regulatory laws of approximately 31 state public utilities commissions are preempted pursuant to Section 1123 of the Bankruptcy Code, and that state regulatory review of WorldCom's reorganization is preempted by Section 525 of the Bankruptcy Code.
7. WorldCom has not disputed the jurisdiction of the District Court to enforce the "Restoring Trust" report's recommendations.
1. Pursuant to § 853(b), this Commission may exempt WorldCom from §§ 851 and 854 if we find that the application thereof with respect to WorldCom's Plan is not necessary in the public interest. The Commission grants such exemptions only in extraordinary situations.
2. Application of §§ 851 and 854 to the Plan is not necessary in the public interest because the transaction changes no rates or terms of service for existing customers; the "Restoring Trust" report will be enforceable by the District Court and before this Commission; it is appropriate to allow a competitor in California's long distance market to emerge from bankruptcy so long as proper reforms are in place; and the Commission stipulated to process this application quickly to avoid a jurisdictional challenge by WorldCom.
3. This decision is subject to the following conditions:
a. WorldCom may not change rates, conditions or terms of service for its California customers as a consequence of this decision.
b. The reorganization of WorldCom proposed here shall not have any impact on the Commission's jurisdiction over WorldCom or its successors.
4. We should exempt the Plan from Commission approval pursuant to § 853(b) subject to the foregoing conditions.
IT IS ORDERED that:
1. This decision grants the application of WorldCom, Inc. (WorldCom) for an order pursuant to Pub. Util. Code § 853(b) exempting the restructuring and certain related intra-corporate transactions undertaken to consummate WorldCom's Plan of Reorganization under Chapter 11 of the Federal Bankruptcy Code from prior Commission approval under §§ 851 and 854.
2. This decision shall be subject to the following conditions:
c. WorldCom may not change rates, conditions or terms of service for its California customers as a consequence of this decision.
d. The reorganization of WorldCom proposed here shall not have any impact on the Commission's jurisdiction over WorldCom or its successors.
3. The "Restoring Trust" report shall be enforceable before this Commission.
4. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
