Gary Winnick founded Global Crossing in 1997, observing the surge in telecommunications of the 1990’s and utilising it to construct the largest fibre optic network in the world for the purposes of transmission of voice, text, video and other data between 27 countries. The Company went public in 1997, with Winnick maintaining hold of 27% of stock in the company valued at $1.4 billion, and a year later held a market value of £38 billion surpassing Ford Motors. Winnick employed the services of Salomon Smith Barney, who employed an analyst with unprecedented level sof influence of the telecoms industry, Jack Grubman. After a year of low revenues and lackluster of cash flow, Winnick sought to emulate WorldCom with its acquisition based business
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Following the telecoms bubble in 2000 and the resulting drop in the NASDAQ telecoms index dropping 65% in under a year, Global Crossing’s share price went from $61 to $16. Alongside this problems began to arise with Global Crossing’s network, a former manager stated “Part of the problem is that it was built partly through acquisitions and partly through construction, it doesn’t function as a global network.” With Global crossing’s share price sliding Winnick worked to keep the company afloat, making deals with other telecom providers to swap network capacity in order to fabricate the appearance of revenue. Roy Olofson, a former employee of Global Crossings finance department, claimed that he was fired after questioning one of these swaps. “Virtually all of these transactions were for identical amount of cash and happened on the same day” stated Olofson’s legal representative Lysaght. “The money was simply wired from one company to another.” Olofson has since filed a complaint in May 2002 via the Los Angeles Supreme Court stating that $720million of Global Crossing’s $3.2 billion sales was due to these swaps.
In December 2001 Global Crossing met with its creditors following a slump in its share price to $1 per share, winning an extension on its credit agreements in exchange for more collateral. This gave Winnick time, a round a month, to attempt to stave off bankruptcy. Firstly Global Crossing attempted to merge with its Pacific