LOS ANGELES/CHICAGO – Telephone and data company MCI Inc. (search) Friday filed a lawsuit against its former chief executive Bernard Ebbers (search) to recover more than $400 million in loans and interest.
The lawsuit was filed by the company, formerly known as WorldCom (search), in U.S. Bankruptcy Court for the Southern District of New York.
Ebbers' attorney was not immediately available to comment. Ebbers has been charged with lying to securities regulators and fraud in connection with the company's $11 billion accounting scandal.
Between fall 2000 and April 2002, Ebbers borrowed about $408.2 million from the company. The loans were restructured when Ebbers resigned in April 2002, allowing him to repay them over five years at a below-market interest rate.
MCI is seeking to have that restructuring voided and wants the court to restore the right to demand immediate repayment of the full amount owed.
Ebbers resigned in April 2002 as federal securities regulators probed the company's backing of the loans.
The company's former chief financial officer and close Ebbers lieutenant, Scott Sullivan (search), has pleaded guilty to three fraud-related criminal charges and agreed to cooperate in the case against Ebbers as part of a plea deal.
"This action reflects MCI's obligation to its shareholders to recover as much of the money owed to the company as possible," MCI spokesman Peter Lucht said.
According to the lawsuit, MCI has recovered just over $70 million from collateral on the loans, in part through the sale of a shipyard, two yachts and some property.
While the suit demands the full $400-plus million, a source familiar with the situation said the company is actually seeking only the money Ebbers still owes plus interest, after that $70 million.
The company exited its bankruptcy, the largest in U.S. corporate history, in late April.
Former U.S. Attorney General Richard Thornburgh, appointed independent bankruptcy examiner, said in January that the company could sue Ebbers and others for their roles in the company's accounting scandal.