Supreme Court on Friday agreed a deal to restructure bankrupt Bermuda-based Global Crossing, which filed for Chapter 11 protection in the United States last year with debts of $12.4 billion.

A new company will be formed called New Global Crossing which will effectively discharge the debts by giving cash to some creditors and shares in the new company to others, said Jan Woloniecki, lawyer for the joint provisional liquidators KPMG.

Under a complex deal, lenders such as banks are expected to get at least 20 percent back, but unsecured creditors will get as little as one or two percent of the money they are owed.

Existing shareholders in Global Crossing will do even worse, getting nothing under the scheme.

Global Crossing, which operates high speed fibre optic networks connecting more than 200 cities in 27 countries, filed the fourth biggest bankruptcy suit in US history last January when the telecommunications market collapsed.

If the rearrangement receives all the necessary regulatory approvals in the United States, Global Crossing's assets will be transferred to New Global Crossing, a company formed by Asian firms Singapore Technologies Telemedia and Hutchison Whampoa.

The creditors and lenders will then be given a mix of cash, new debts notes and stock in New Global Crossing.

Mike Morrison, partner in corporate restructuring department of KPMG, told The Royal Gazette yesterday: "The joint provisional liquidators are pleased that the Supreme Court of Bermuda has today sanctioned the scheme of arrangement.

"Although subject to certain further conditions to be met, including regulatory approvals in the US, this reorganisation represents the best possible outcome for creditors generally under the prevailing market conditions.

"Most of the procedural aspects of dealing with the restructuring have been completed but there are several regulatory approvals needed from the US and we hoped to have these resolved in the next few months."

He said it was difficult to say in cash terms exactly how much the creditors would get back because there were around a dozen different classes of creditors, each receiving a mix of cash, shares and notes.

"Distributions being made under the scheme of arrangement to each class of creditor are set out in the scheme of arrangement document and reflect the level of security interests of each creditor class," he said.

Chief Justice Austin Ward approved the restructuring at Supreme Court on Friday and there were no objections from the creditors.

It follows approval of the plan of reorganisation on Boxing Day in the United States Bankruptcy Court in the Southern District of New York.

The new company will be incorporated in Bermuda, according to the reorganisation plan filed in New York.

The complicated settlement had to be approved by Supreme Court in Bermuda as well because the Global Crossing group has 16 companies on the Island and is registered here.

The requisite numbers of creditors approved the restructuring in the US and Bermuda, although there were some objections, said Mr. Woloniecki.

Under the restructuring, Global Crossing chairman Gary Winnick, who made a fortune selling company stock shortly before the collapse, will step down as will co-chairman Lodwrick Cook.

Mr. Winnick, who has been portrayed as one of the faces of corporate greed and mismanagement in the US, sold $734 million of Global Crossing stock, including $123 million in the weeks before the company went bust.

He told a Congressional hearing in October that he was not informed of the company's deteriorating financial position when he offloaded the $123 million of stock.

Under the plan, New Global Crossing will issue new senior secured notes valued at $200 million, 22,000,000 shares of the new common stock, and 18,000,000 shares of new preferred stock.