Maxwell firm on bankruptcy brink

KEVIN Maxwell has finally admitted that the comeback company he once promised he would use to help reimburse Mirror pensioners is on the verge of bankruptcy.

Maxwell, 43, who became one of Britain's biggest bankrupts after the collapse of his father's media empire, conceded that the situation was dire for Telemonde, a telecom company he founded with friends four years ago.

'We are continuing in business, but obviously it is much smaller,' Maxwell told Financial Mail. 'It is better for stakeholders to continue in a reduced business than to cease trading.'

But, in the company's annual report lodged with America's Securities and Exchange

Commission on Friday, Telemonde said it was uncertain if it could continue operating.

The report said: 'The management is addressing the solvency issues facing the company by cutting costs, seeking fresh financing and focusing on the provision of high-margin advisory services to the telecommunications sector.

'We have not sought the protection of the courts for any of our companies, but may be forced to do so should any of our creditors threaten the continuance of the group.'

Telemonde owes $119.5 million (£82.5 million), including $2.2 million in unpaid taxes, and has defaulted on its debts to onetime giants of the telecom industry including Global Crossing and WorldCom.

On Friday, shares in Telemonde, which traded above $8 in America three years ago, were listed as changing hands at a fraction of a cent on so-called pink sheets - an informal broker exchange that regulators consider fraught with fraud and deception.

Maxwell, the Telemonde chairman, owns three% of the company.

Since it was formed in March 1998, the firm, which paid Maxwell $354,440 in salary and benefits in 2000 before executives took massive pay cuts, has accumulated losses of $189.8 million.