[PRND21]

The Carmel, Indiana- based company listed $52.3 billion in assets and $51.2 billion in debts

So what's the problem? Pay your debts.

[Professional]

Assets like pensions and goodwill? Yeah, I thought WCOM had assets...

[JasonC]

They are trying to do the honest thing. You are supposed to declare bankruptcy -before- your net worth goes negative; that way your creditors actually have a chance to recover their legitimate claims. This is particularly important for an insurance company, because their liabilities are first off to policy holders.

There is no way they can be liquid with only $1.1 billion in equity left, only 2% of assets. They can't turn all of their assets into cash in a day, you know. And whether they are actually worth their full value, especially if needed right away, is always problematic. In liquidations, it is not uncommon to see the valuation of the asset side of the sheet - for everything beyond cash - shrink by 30%, while the liabilities side stays about the same.