Monday, 30 December, 2002, 20:22 GMT
US bankruptcies break records
WorldCom has taken top spot among global bankruptcies
For the second year in a row, the aftermath of the stock market bubble of the 1990s has pushed US corporate bankruptcies to new records.
The combination of massive accounting fraud and the free spending of the past decade has brought down a string of household names in the past year, including five of the 10 biggest collapses on record.
The 186 public companies which went bust had a massive $368bn in assets, dwarfing last year's then all-time record of $259bn.
But many are still functioning, thanks to the US's Chapter 11 bankruptcy system which protects firms from their creditors while they restructure.
Whereas 2001's corporate failures were predominantly the result of debt problems, accounting scandals were the most notorious feature of 2002's list.
Of the five biggest failures, four featured accounting trouble.
Topping the list was phone company WorldCom, whose $104bn in assets made it the most expensive collapse in history.
In comparison, Enron's bankruptcy recorded in December last year looks almost modest.
Conseco, Global Crossing - another telecoms firm - and cable company Adelphia Communications were all also in trouble over allegations that they fiddled the figures.
Only UAL, the parent of United Airlines, found itself in trouble solely for business reasons. More to come
The worst is not over yet either, observers fear.
And accounting fraud - WorldCom's accounted for more than $9bn of false profits on its balance sheet - is likely to remain the main motif.
"To have a really big bankruptcy, you have to both have a company take on a huge amount of debt and either be badly run or fraudulently run," said Andrew Hodge, US economist for the Global Insight forecasting group.
"There has to be something sufficiently attractive about the company that creditors foolishly or mistakenly extend huge amounts of credit."
Many believe that the telecoms and tech companies and airlines that dominated the past year's list will give way to power companies and retailers, if confidence among consumers finally cracks.
And franchise holders are also at risk, exemplified by the filing for bankruptcy in December of AmeriKing, one of Burger King's largest fast food franchise chains.