Investment bank J.P. Morgan Chase & Co. has sued 23 former officers and directors of Global Crossing Ltd. for $1.7 billion, accusing them of hiding important financial information while running the fiber-optic network.
J.P. Morgan contends founder Gary Winnick and others "devised, directed and controlled" a massive scheme to disguise Global Crossing's poor financial health so the company could get $2.25 billion in loans, according to the lawsuit filed in New York state court.
J.P. Morgan was one of several creditors and bondholders that put a total of $12.4 billion into Global Crossing before the carrier collapsed nearly two years ago and filed for bankruptcy protection.
Global Crossing is not a defendant in the lawsuit, filed Oct. 27. The company, based in Bermuda, disclosed the suit in a Securities and Exchange Commission filing Monday.
An attorney for Winnick did not immediately return a call seeking comment.
Global Crossing emerged from bankruptcy Tuesday. It has moved its headquarters to Florham Park, New Jersey, and slashed long-term debt to just $200 million from $11 billion.