Global Crossing

What Is Global Crossing?

Global Crossing was a multinational telecommunications provider that was acquired by Level 3 Communications in October 2011. Prior to its acquisition by Level 3 Communications, Global Crossing pulled in boundless media consideration in the wake of filing for bankruptcy in January 2002. This bankruptcy happened in the midst of an accounting scandal in which it had supposedly inflated its reported earnings figures.

Figuring out Global Crossing

For some investors, Global Crossing is essential to act as an illustration of the irrational exuberance that happened at the level of the dot-com bubble. In this respect, it is in many cases refered to alongside the scandalous energy company, Enron Corporation.

The comparison between Global Crossing and Enron isn't without its merits. In 2001, for example, the two companies investigated a likely transaction in which they would expand their respective revenues by $650 million in spite of no genuine goods or services evolving hands. Albeit this transaction was rarely completed, it is a pertinent illustration of the types of aggressive and ostensibly fraudulent strategies sought after by the two companies in their endeavors to drive their growth.

Eventually, Enron bowed out of all financial obligations in December 2001, with Global Crossing following short of what one month a while later. At that point, Global Crossing's bankruptcy was the fourth-largest in U.S. history. In 2005, it settled with the Securities and Exchange Committee (SEC). Under the terms of this settlement, it was resolved that Global Crossing had failed to agree with various accounting laws.

Capacity Swaps

One of the manners in which Global Crossing swelled its earnings was by the utilization of purported capacity swaps. This method alludes to the practice of legally trading telecommunications capacity rights among providers in order to legitimize the recording of new revenues. This practice was frequently managed with practically no money, goods, or services really evolving hands, accordingly making the illusion of useful activity.

Illustration of Global Crossing

At the hour of its bankruptcy in January 2002, Global Crossing held assets of more than $20 billion. These assets were slowly sold off, and the company rose up out of bankruptcy in April 2004 following the settlement of various lawsuits including the company's supposed acts of securities fraud.

Following its rising up out of bankruptcy, Global Crossing sought after new growth opportunities through a series of acquisitions all through the world. In October 2011, the company was itself acquired by Level 3 Communications in a deal valued at $3 billion.

Features

• The company was known for its aggressive and purportedly fraudulent accounting practices. It even investigated a possible transaction with Enron that would have swelled each company's respective revenues by $650 million.
• Global Crossing was a large telecommunications provider whose well known bankruptcy in January 2002 followed that of the Enron Corporation in December 2001.
• In 2004, Global Crossing settled various lawsuits for supposed securities fraud.
• In October 2011, Global Crossing was acquired by Level 3 Communications in a deal valued at $3 billion.
• At that point, Global Crossing's bankruptcy was the fourth-largest in U.S. history.