Trustees of the defunct company have filed complaint in the US District Court of New Jersey seeking relief under the US Racketeer Influenced and Corrupt Organization Act and for mismanagement and breach of duty. They are seeking compensation for damages suffered by KPNQwest and its creditors.
Named in the action are John A McMaster, a former CEO of KPNQwest and JP Nacchio and RS Woodruff, former members of KPNQwest board of supervisory directors.
Trustee Jan van Apeldoorn told Reuters that they wanted to recover the deficit in the collapsed company, which was about $3bn. However, given that the trustees managed to dispose of the bulk of the company’s assets within months of the bankruptcy, Van Apeldoorn would not elaborate on why they decided to sue under the RICO Act so long after the event.
He said the trustees are still considering whether to seek damages in a Dutch court, where they could also sue KPN.
KPNQwest was set up in 1998 as a joint venture between Dutch incumbent KPN NV and Qwest Communications. KPN contributed 2,100 miles of network, transatlantic capacity and cash while Qwest put in the resources of EUnet, a European commercial internet service provider with nearly 84,000 customers and operations in 14 countries.
A period of hectic expansion followed but huge over-capacity in the sector and a high level of debt left it unable to survive. A company that once had a market capitalization of 42bn euros ($51bn) became the most notable European victim of the collapse of the dot-com boom.
Denver, Colorado-based Qwest Communications International Inc is currently under federal investigation over its accounting practices in 2000 and 2001, and has set aside more than $100m to cover minimum liabilities arising from the probe.
The company had no immediate response to the legal action.
