NEW YORK (CNN/Money) - Bankrupt telecom WorldCom Inc. has drafted a legal complaint against former CEO and Chairman Bernard Ebbers and is prepared to start a proceeding against him to rescind Ebbers' severance package, a source involved in the company's bankruptcy proceedings tells CNNfn.

The legal draft argues that the contract between the company and Ebbers, reached before the company's accounting problems were revealed, was negotiated under fraudulent terms.

WorldCom has already informed the creditors committee of its intent and they consider it to be an act of good faith, according to the source.

Because WorldCom is operating under the rules of bankruptcy, it has the right to get out of unfavorable contracts. The company is in the process of reviewing its 15,000 contracts and is working to extricate itself from money-losing business relationships.

WorldCom's board is meeting in Washington Tuesday. Richard Breeden, the court-appointed monitor of WorldCom, is at the meeting, according to his office. As monitor, Breeden has the right to approve or reject compensation packages at WorldCom, though he does not have the right to rescind Ebbers' severance.

The severance package included $408.2 million in low-interest loans by the company, and pension payments equal to $1.5 million a year for the remainder of his life, according to the company's proxy statement.

Separately, the company announced Tuesday afternoon that it has started a search for a successor to CEO John Sidgmore, who succeeded Ebbers in April on an interim basis.

Sidgmore will remain in the CEO position while the search is completed and will retain his position as vice chairman once the new CEO is found. Bert Roberts will continue in his position of chairman which he assumed with Ebbers' resignation. The unsecured creditors committee will also actively participate in the selection process and according to the company it supports the search at this time.

"I have concluded that having moved WorldCom through the initial phase of the bankruptcy process now is the appropriate time for the company to initiate a search for a long-term CEO," said a statement from Sidgmore.

The statement said the company is still on track with its previous goal to emerge from bankruptcy in the middle of next year. It did not make any mention of a legal move against Ebbers or his severance package.

And federal prosecutors are apparently focusing on the company's chief operating officer, Ronald Beaumont, believing he may have information related to Ebbers' role in WorldCom's bankruptcy.

Ebbers has yet to be linked to the $7 billion in improperly booked expenses that led to WorldCom's Chapter 11 bankruptcy filing, though former Chief Financial Officer Scott Sullivan has been indicted.

Breeden, a former SEC chairman, is using his court-appointed monitor position to investigate the use of a Falcon 20 jet that was rented to board member Stiles Kellett Jr. for $1 a month, plus fees, in 2001. The jet normally costs as much as $1 million a year, a person familiar with the situation told the Wall Street Journal. The use of the plane wasn't disclosed at the time in regulatory filings, or to some board members.

Kellett, as head of the board's compensation committee, was one of the board members who signed off on Ebbers' compensation package after the board decided to oust him, according to the Journal. Kellett's deal for a jet could give prosecutors an opening to pursue Ebbers criminally, the Journal reported, citing people familiar with the situation. Prosecutors are also probing Kellett's role, trying to learn whether his approval terms of Ebbers' loan and severance package were tied to use of the jet.

Stuart Pierson, a lawyer for Kellett, pointed out to the Journal that all seven directors agreed to Ebbers' separation agreement with the assistance of counsel.

The board could choose to reverse the terms of the severance agreement, terms of which allow Ebbers to pay off his company debts over a five-year period beginning in 2003. Such an action would make it possible for creditors to seize some or all assets Ebbers pledged as collateral, including major timber holdings, a yacht-building business in Florida, and a 500,000-acre ranch in Canada, according to the report.

Ebbers was unavailable for comment to the paper, though an attorney for him has said Ebbers has no knowledge or involvement in the company's questionable accounting.

Prosecutors originally hoped to gain the cooperation of Sullivan, the former finance chief, charged last month with securities fraud. He told WorldCom officials in June that he had informed Ebbers of hundreds of millions of dollars being moved.

But Sullivan, who could go to jail, has so far refused to strike a deal with prosecutors, and hasn't told them what, if anything, Ebbers knew of the situation, the Journal reported.