New York ? The judge overseeing MCI’s bankruptcy approved the company’s plan to emerge from the biggest bankruptcy in U.S. history, a financial reorganization that will pay back most creditors 36 cents on the dollar and erase $35 billion of debt.

The ruling Friday by U.S. Bankruptcy Judge Arthur J. Gonzalez comes 16 months after the company formerly known as WorldCom slid into disgrace after revealing it had fabricated $11 billion in profits.

It wasn’t immediately clear when the plan and MCI’s emergence from bankruptcy protection would officially take effect.

Judges often set an effective date between one and three months after approval.

The reorganization plan is designed to give MCI a fighting chance at survival in an industry besieged by fierce price wars, sluggish business spending and competing technologies such as cell phones and Internet-based calling.

But a freshly cleaned financial slate and a new name will not, however, suddenly sanitize the company’s sullied reputation or wipe away its legal troubles, including charges of securities fraud in the company’s accounting deception and a federal investigation into the company’s telephone call routing practices.

Still, MCI emphasized Friday that it is a much different company now.

“We have spent the past 10 months building a world-class board of directors, recruiting seven new key executives, including a CFO (chief financial officer), a COO (chief operating officer), a general counsel and a chief ethics officer, and instituting a standard-setting corporate governance structure,” Michael Capellas, MCI chairman and chief executive, said Friday.

MCI remains the nation’s second biggest provider of long-distance and other communications services for consumers and businesses.