NEW YORK, July 5: WorldCom bondholders are considering a proposal to swap their debt for equity in a pre-arranged filing for bankruptcy-court protection, the Wall Street Journal said on Friday.

The Journal, citing people familiar with the proposal, said bondholders with some 26 billion dollars in bonds are by far the largest creditors and would have greater influence over developments with WorldCom in Chapter 11 than they would have from outside.

But any Chapter 11 filing would almost certainly wipe out existing shareholders, the newspaper commented.

The plan assumes that WorldCom’s fundamental business is essentially sound.

But such assumptions could become open to question as further disclosures about accounting irregularities cast doubt on WorldCom’s health, the Journal noted.

The Journal also reported that the Justice Department is seeking to curtail WorldCom’s internal investigation into accounting irregularities to allow the government to first conduct its own inquiry at the company.—AFP