WorldCom Inc., the telecommunications titan that last month filed the largest bankruptcy petition in U.S. history, has not paid independent sales representatives their July commission checks.
Some agents said this week WorldCom has not communicated fully whether the carrier would pay them or treat them as an unsecured creditor. Independent sales representatives often are listed as unsecured creditors in a Chapter 11 bankruptcy filing, but are compensated on new business they book after the filing on behalf of a provider.
A WorldCom spokesperson did not immediately return an inquiry seeking comment.
But in a letter distributed to channel partners that PHONE+ obtained Thursday from an agent, WorldCom said sales partners would be compensated for business they booked after July 22. However it was unclear whether sales reps would be paid for business they booked before the bankruptcy petition was filed.
“We are strictly prohibited from paying any amounts due for pre-petition commissions by bankruptcy law,” the letter stated. “Such payments will be determined on a case by case basis, or, at the conclusion of the Chapter 11 case in accordance with the plan of reorganization that has been voted upon and subsequently approved by the court.”
Agents voices skepticism this week as to how WorldCom would treat them with respect to their commissions.
“I don’t believe there has been a final determination as to whether we’ll be unsecured creditors or whether we’ll be considered an essential expense for the ongoing continuation of the business,” a master agent said late Wednesday. “We’re hoping for something definitive in the coming days. We’re also pursuing our legal options if it comes to that.”
One master agent said Thursday his sales organization is confident WorldCom will pay the July commissions. “No we have not been paid yet. Although some reps have been paid since they filed bankruptcy because they got in just before the petition was filed,” he said. “However, we have been communicating with WorldCom management almost daily on this topic and are confident that our commissions will be brought current with our” July 15 payment.
Another sales representative said Wednesday agents had not been paid nor had they received any direct contact from WorldCom’s channel managers. “The only information I have heard from someone who actually works in the channel distribution program is that WorldCom is planning on paying for all traffic after the filing, but that the amount owed at the time of the filing (May 1 through July 22 traffic) is still up in the air.”