NEW YORK—In a move aimed at shoring up the morale of its remaining workers, bankrupt telecom WorldCom Inc. won court permission Tuesday to hand $36 million in severance payments to laid-off employees.
The ruling, in U.S. Bankruptcy Court in Manhattan, also allows WorldCom, based in Clinton, Miss., to retract $1.4 million in severance payments promised to 19 laid-off company executives before the company filed for bankruptcy in July as a multibillion-dollar accounting scandal unwound.
The decision allows each of some 4,000 laid-off workers to receive an average of $9,000 apiece to supplement the $4,650 WorldCom already paid.
In the four months before filing for bankruptcy on July 21, WorldCom laid off or said it would fire 12,800 people. The company since has said it would raise the total to 17,000.
It is unclear whether WorldCom will offer, or the court will approve, identical severance payments to other current or former workers.
WorldCom owns the nation's No. 2 long-distance carrier, MCI Communications Corp., which has a call center operation in Hunt Valley. At least 780 workers were laid off there.
In New York, Marcia Goldstein, WorldCom's attorney, urged U.S. Bankruptcy Judge Arthur Gonzalez to approve the payments. They would allow, she said, WorldCom to "restore the confidence of its employees, whose cooperation and continued loyalty are essential."
With WorldCom in Chapter 11 bankruptcy proceedings, in the biggest such case in U.S. history, the court must approve virtually every dollar the company spends and hear objections from creditors.
Attorneys for all creditors but one, carrier Broadwing Inc., agreed to WorldCom's severance proposal.
Also Tuesday, Gonzalez granted WorldCom permission to seek a better price for its office space at Pentagon City, in Northern Virginia just outside Washington D.C., than the $101 million offered by real estate firm Tishman-Speyer Properties Inc.