A Global Mess

Unfortunately, the handwriting on the wall for Global Crossing has been writ large. Its legacy grows more troublesome by the moment, amid growing speculation that the scandal-plagued network service provider will be liquidated. When the company unveiled its reorganization, it was clear that the plan offered little of value to existing stakeholders. By following Enron through the bankruptcy courthouse doors, GX heightened Wall Street's bad case of jitters about accounting, bringing scrutiny and selloffs to any other major provider that relied upon IRUs for revenue.

The list of parties who have been burned by Global Crossing's collapse grows longer by the minute. According to a story in today's Wall Street Journal, many key investors see more risk in a reorganization, and want to cut their losses and liquidate.

"It is more than likely that Global Crossing will go into liquidation," Michael Kaufman, a fund manager with Capital K Partners in Boston, told the Journal. "And the sooner it does the higher the recovery for the creditors." GX had $1 billion in cash when it filed, but continues to hemorrhage cash and may lose as much as $500 million in the first quarter.

A liquidation of the huge network - which includes 1.7 million fiber miles, 249 points of presence in 25 countries and metro networks in 19 major cities - might save a few dollars for Global Crossing's lenders. But it raises fresh anxiety for carrier hotel and data center operators who have GX as tenants. Like they don't have enough headaches already?