Document:

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                                                                   EXHIBIT 10.31

                                                                  EXECUTION COPY

        THIRD AMENDMENT TO THE CREDIT AGREEMENT AND FORBEARANCE AGREEMENT

          THIRD AMENDMENT to the CREDIT AGREEMENT AND FORBEARANCE AGREEMENT,
dated as of March 25, 2002, to the Credit Agreement dated as of October 8, 1999
(as amended by the First Amendment to Credit Agreement and Equity Contribution
Agreements dated as of December 14, 1999 and the Second Amendment to Credit
Agreement dated as of November 16, 2000, the "CREDIT AGREEMENT") among Flag
Atlantic Limited, a company organized and existing under the laws of Bermuda
(the "COMPANY"), the banks and other financial institutions party thereto (the
"LENDERS"), Barclays Bank Plc, as the administrative agent (in such capacity,
the "ADMINISTRATIVE AGENT") for the Lenders, Dresdner Bank AG, New York Branch,
as the documentation agent, Westdeutsche Landesbank Girozentrale, New York
Branch, as the syndication agent, and Barclays Capital, as the lead arranger.
Capitalized terms not otherwise defined herein shall have the same meanings as
specified therefor in the Credit Agreement.

                             PRELIMINARY STATEMENTS

          (1) The Company, the Administrative Agent and the Lenders have been in
discussions and are trying to determine whether one or more of the following
Events of Default have occurred and are continuing:

          (a) an Event of Default under Article VII -- subsection (a) of the
     Credit Agreement as a result of the failure of the Company to prepay the
     outstanding Loans, together with accrued and unpaid interest, on the
     Conversion Date from the proceeds of the payment made by Teleglobe USA Inc.
     ("TELEGLOBE") on such date pursuant to that certain Indefeasible Right of
     Use Agreement dated as of the ___ [sic] day of October, 1999 among the
     Company, Flag Atlantic USA, Limited and Teleglobe, as may be required under
     Sections 2.9(a) and 8.8(c) of the Credit Agreement or, in the alternative,
     Section 8.9(b) of the Credit Agreement;

          (b) Events of Defaults under Article VII -- subsection (b) of the
     Credit Agreement as a result of the failure of the Company, by making
     certain payments to the Contractor for upgrades on the Project, to comply
     with (i) the provisions of Section 6.9 thereof that prohibit the payment by
     the Company or any of its Subsidiaries of amounts for the construction and
     installation of the Project in excess of the Project Budget or the
     Operating Budget, as applicable, other than from Permitted Sources, (ii)
     the provisions of Section 6.20(a) thereof that prohibit the Company or any
     of its Subsidiaries from and after the Conversion Date from making any
     expenditure in respect of the purchase of capital assets except for
     expenditures which could not reasonably be expected to adversely affect the
     Project and (A) are included in Project Budget or (B) do not cause the
     Company and its Subsidiaries to spend more than $1,000,000 (unless such
     excess comes from Permitted Sources or amounts on deposit from the Capacity
     Upgrades Reserve Account) and (iii) the provisions of Section 6.10 thereof
     that prohibit any material amendment, supplement or other modification or
     waiver of any Project Document that, among other things, would require
     additional amounts to be paid by the Company thereunder unless provided for
     from Permitted Sources;

          (c) Events of Defaults under Article VII -- subsection (b) of the
     Credit Agreement as a result of the failure of the Company, by permitting
     certain agreements entered into prior to the date of this Agreement for
     "packaged" sales of Capacity of the Company and one or more of its

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     Affiliates to be entered into by (and payments by customers thereunder to
     be made to) FLAG Telecom Holdings Ltd. and/or one or more of its
     Affiliates, to comply with (i) the provisions of Section 6.13 thereof that
     require all such agreements to be entered into directly by the Company and
     (ii) the provisions of Section 6.18 thereof that require all agreements
     with Affiliates of the Company to be on terms no less favorable to the
     Company or its applicable Subsidiary than those that the Company or such
     Subsidiary could obtain in an arm's-length transaction with a Person that
     is not an Affiliate thereof;

          (d) a Default or an Event of Default under Article VII -- subsection
     (c) of the Credit Agreement as a result of the failure of the Company to
     deliver to the Administrative Agent, with a copy for each Lender, the
     audited consolidated financial statements of the Company and its
     consolidated Subsidiaries for the fiscal year ended December 31, 2001 as
     required under Section 5.2(a) of the Credit Agreement, together with such
     certificates and other related information as is required to be delivered
     with such audited consolidated financial statements under Sections 5.2(c)
     and 5.2(d) of the Credit Agreement;

          (e) an Event of Default under Article VII - subsection (b) of the
     Credit Agreement as a result of the failure of the Company to comply with
     the provisions of Section 5.9(a) of the Credit Agreement that require the
     delivery of written notice to the Administrative Agent of the occurrence
     and continuance of the Events of Defaults described in clauses (a), (b),
     (c), (d) and (f) of this Preliminary Statement (1) promptly after a
     Responsible Officer of the Company had knowledge thereof; and

          (f) an Event of Default under Article VII - subsection (d) of the
     Credit Agreement as a result of the material inaccuracy of one or more
     representations and warranties made by the Company or any of its
     Subsidiaries or the Sponsor solely as a result of (i) the occurrence and
     continuance of one or more of the Events of Defaults described above in
     clauses (a), (b), (c), (d) or (e) of this Preliminary Statement (1) or (ii)
     non-cash charges for asset impairment write-downs during the period ending
     December 31, 2001 of up to $360,000,000, which non-cash charges might be
     expected to have a Material Adverse Effect.

The Events of Defaults described above (to the extent any such Event of Default
shall have occurred and be continuing) are hereinafter collectively referred to
as the "SPECIFIED EVENTS OF DEFAULT".

          (2) The Company has requested that the Administrative Agent and the
Lenders agree to forbear during the Forbearance Period (as hereinafter defined)
from exercising all default-related remedies against the Company or any of the
other Obligors under the Financing Documents as a result of the occurrence and
continuance of the Specified Events of Default.

          (3) The Administrative Agent and the Lenders have indicated their
willingness to agree to the forbearance described above in Preliminary Statement
(2) to this Agreement on the terms and subject to the satisfaction of the
conditions set forth herein.

          NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:

          SECTION 1. FORBEARANCE. (a) The Administrative Agent and the Lenders
hereby agree solely during the Forbearance Period to forbear from the exercise
of their default-related remedies against the Company or any of the other
Obligors solely to the extent the availability of any such remedy arises
exclusively from the Specified Events of Default; PROVIDED that the Company
shall comply at all times during the Forbearance Period with all of the
provisions, limitations, restrictions or prohibitions that

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would otherwise be effective or applicable under any of the Financing Documents
(whether or not during the occurrence and continuance of any Default or Event of
Default). For the purposes of this Agreement, "FORBEARANCE PERIOD" means the
period commencing on the Effective Date and ending on the earliest to occur (any
such occurrence being a "FORBEARANCE TERMINATION EVENT") of: (i) April 30, 2002,
(ii) the occurrence of any Default or Event of Default other than a Specified
Event of Default, (iii) the failure of the Company to comply with any of its
obligations under this Agreement, including without limitation, the provisions
of Section 3 hereof, or the inaccuracy in any material respect of any
representation, warranty or acknowledgment made by the Company in this Agreement
or (iv) the commencement by any holder of Indebtedness of the Company or any of
its Subsidiaries (other than Indebtedness under the Loan Documents) of the
exercise of any proper remedy or the taking by any such party of any proper
action in furtherance of the collection or enforcement of any claim or Lien
against the Company or any of its Subsidiaries or any of their respective
assets. Upon the occurrence of a Forbearance Termination Event, the agreement of
the Administrative Agent and the Lenders to forbear with respect to the exercise
of any default-related remedy provided for under or in respect of any of the
Financing Documents shall immediately terminate without the requirement of any
demand, presentment, protest or notice of any kind, all of which the Company
hereby expressly waives. The Company hereby agrees that the Administrative Agent
and the Lenders may at any time thereafter proceed to exercise any and all of
their respective rights and remedies under any or all of the Financing Documents
and/or applicable law, including, without limitation, their respective rights
and remedies in connection with any or all Defaults or Events of Default,
including, without limitation, the Specified Events of Default.

          (b) This Agreement shall constitute and be a part of the Financing
Documents for all purposes of this Agreement, the Credit Agreement and the other
Financing Documents and any construction or interpretation thereof. Any
agreement to extend the Forbearance Period must be set forth in writing and
signed by the Administrative Agent and the Majority Lenders.

          (c) THE COMPANY ACKNOWLEDGES AND AGREES THAT THE AGREEMENT OF THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREUNDER TO FORBEAR WITH RESPECT TO THE
EXERCISE OF THEIR DEFAULT-RELATED REMEDIES AGAINST THE COMPANY OR ANY OF THE
OTHER OBLIGORS WITH RESPECT TO THE SPECIFIED EVENTS OF DEFAULT SHALL NOT
CONSTITUTE A WAIVER OF ANY OR ALL SUCH SPECIFIED EVENTS OF DEFAULT OR, EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 2 HEREOF, AN AMENDMENT OF THE CREDIT AGREEMENT OR
ANY OF THE OTHER FINANCING DOCUMENTS AND THAT, SUBJECT TO THE TERMS OF THIS
AGREEMENT, THE ADMINISTRATIVE AGENT AND THE LENDERS EXPRESSLY RESERVE ALL RIGHTS
AND REMEDIES THAT THE ADMINISTRATIVE AGENT AND THE LENDERS NOW OR MAY IN THE
FUTURE HAVE UNDER ANY OR ALL THE FINANCING DOCUMENTS AND/OR APPLICABLE LAW IN
CONNECTION WITH ALL DEFAULTS AND EVENTS OF DEFAULT (INCLUDING, WITHOUT
LIMITATION, THE SPECIFIED EVENTS OF DEFAULT).

          SECTION 2. AMENDMENTS OF THE CREDIT AGREEMENT. The Credit Agreement
is, upon the occurrence of the Effective Date, hereby amended in the following
manner:

          (a) The definition of "SPECIFIED PARTICIPANT" set forth in Section 1.1
     of the Credit Agreement is hereby amended and restated in its entirety to
     read as follows:

               "SPECIFIED PARTICIPANT" shall be the collective reference to the
          Company, FLAG Atlantic Holdings and Flag Telecom Holdings Ltd. and at
          any time prior to the expiration of the Warranty Period, Alcatel."

          (b) Article VII - subsections (q) and (r) of the Credit Agreement are
     hereby amended and restated in its entirety to read as follows:

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               "(q) the Company, FLAG Atlantic Holdings or Flag Telecom Holdings
          Ltd. shall fail to make any payment (whether of principal or interest
          and regardless of amount) in respect of any Material Indebtedness
          within any applicable grace period, when and as the same shall become
          due and payable; or

               (r) any event or condition occurs that results in any Material
          Indebtedness of the Company, FLAG Atlantic Holdings or Flag Telecom
          Holdings Ltd. becoming due prior to its scheduled maturity or that
          enables or permits (with or without the giving of notice, the lapse of
          time or both) the holder or holders of any Material Indebtedness of
          the Company, FLAG Atlantic Holdings or Flag Telecom Holdings Ltd. or
          any trustee or agent on its or their behalf to cause any such Material
          Indebtedness to become due, or requires the prepayment, repurchase,
          redemption or defeasance thereof, prior to its scheduled maturity;
          or".

          SECTION 3. COVENANTS. (a) From the date of this Agreement until the
occurrence of a Forbearance Termination Event, the Company and, by its execution
and delivery of this Agreement, Flag Telecom Holdings Ltd. agree to transfer,
and to cause each of their applicable Subsidiaries to transfer, to the Company
or its applicable Subsidiary, within three Business Days after receipt thereof,
any and all payments received thereby in respect of sales, leases or other
dispositions of Capacity of the Company or any of its Subsidiaries or capacity
on other telecommunications systems acquired by the Company or any of its
Subsidiaries.

          (b) From the date of this Agreement until the occurrence of a
Forbearance Termination Event, the Company:

          (i) shall not have the right to request or obtain, and no Lender shall
     have any obligation to make, any Revolving Credit Loan or any other
     extension of credit under the Credit Agreement or any of the other
     Financing Documents; and

          (ii) shall not make any payments to any Person other than (A) payments
     of up to $14,500,000 in the aggregate from amounts on deposit in the
     Revenue Account and the Current Account for Operating Expenses that are due
     and payable by their terms on or prior to April 30, 2002, in each case
     which Operating Expenses in excess of $200,000 are specified on Annex A
     hereto, and (B) payments of up to $6,000,000 in the aggregate from amounts
     on deposit in the Maintenance Reserve Account, the Construction Account and
     the Operating Reserve Account so long as each such payment is permitted
     under the terms of the Credit Agreement, after giving effect to the terms
     of this Agreement.

          SECTION 4. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AGREEMENT. This Agreement shall become effective as of the first date (the
"EFFECTIVE DATE") on which each of the following conditions precedent shall have
been satisfied, which date must occur on or prior to March 28, 2002:

          (a) The Administrative Agent shall have received counterparts of (i)
     this Agreement executed by the Company, Flag Telecom Holdings Ltd. and the
     Majority Lenders or, as to any of the Lenders, advice satisfactory to the
     Administrative Agent that such Lender has executed and delivered this
     Agreement and (ii) the Consent to this Agreement attached hereto executed
     by FLAG Atlantic Holdings and each of the Obligors (other than the
     Company).

          (b) The Company shall direct the Administrative Agent in writing
     (including, without limitation, by providing the Administrative Agent with
     an Expense Certificate in the form of

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     Exhibit J to the Credit Agreement updated as of not more than five Business
     Days prior to the Effective Date) to apply the aggregate proceeds on
     deposit in the Pre-Sale Proceeds Account and the Revenue Account on the
     Effective Date in the following manner:

               (i) FIRST, up to $19,765,100 in the aggregate (A) to the Persons
          entitled thereto, for the payment of all Operating Expenses and
          capital expenditures or income taxes of the Company or any of its
          Subsidiaries then due and owing in item (1) of such Expense
          Certificate and (B) to the Current Account, for the payment of the
          amounts identified as Operating Expenses and capital expenditures or
          income taxes of the Company or any Subsidiary expected to be due and
          owing prior to the next Operating Expense Transfer Date in item (2) of
          such Expense Certificate;

               (ii) SECOND, for the account of the Term Loan Lenders, the
          prepayment in full of the scheduled principal payments with respect to
          the Term Loans due on or prior to March 31, 2002, together with,
          unless otherwise paid under subclause (b)(i) of this Section 4, all
          accrued and unpaid interest thereon which the Administrative Agent
          certifies to the Company to be due and payable on such date;

               (iii) THIRD, for the account of the Revolving Credit Lenders, the
          prepayment the aggregate principal amount of all Revolving Credit
          Loans outstanding on the Effective Date, together with, unless
          otherwise paid under subclause (b)(i) of this Section 4, all accrued
          and unpaid interest thereon which the Administrative Agent certifies
          to the Company to be due and payable on such date;

               (iv) FOURTH, to the Maintenance Reserve Account, the Construction
          Account and the Operating Reserve Account (A) not more than $6,000,000
          in the aggregate LESS the aggregate amount on deposit in the
          Maintenance Reserve Account, the Construction Account and the
          Operating Reserve Account immediately prior to any deposit of funds
          pursuant to this subclause (b)(iv); and

               (v) FIFTH, for the account of the Term Loan Lenders, (A)
          $17,000,000 of the remaining proceeds on deposit in the Pre-Sale
          Proceeds Account and the Revenue Account on the Effective Date shall
          be applied to the prepayment of the Term Loans outstanding on such
          date and to the remaining scheduled principal payments thereof in
          inverse order of maturity and (B) unless otherwise paid under
          subclause (b)(i) of this Section 4, such additional amount of the
          remaining proceeds on deposit in the Pre-Sale Proceeds Account and the
          Revenue Account on the Effective Date shall be applied to the payment
          of accrued and unpaid interest on such prepayment of the Term Loans
          which the Administrative Agent certifies to the Company to be due and
          payable on such date.

          (c) The Company shall have delivered to the Administrative Agent, with
     a copy for each Lender, its unaudited consolidated balance sheet and
     related consolidated statements of income, retained earnings and change in
     cash flow as of the end of and for the fiscal year ended December 31, 2001,
     setting forth in each case in comparative form the figures for the previous
     fiscal year, all certified by a Responsible Officer of the Company as
     presenting fairly in all material respects the financial condition and
     results of operations of the Company and its consolidated Subsidiaries in
     accordance with GAAP consistently applied.

          (d) The representations and warranties contained in Section 5 of this
     Agreement and each of the Financing Documents shall be true and correct in
     all material respects on and as of the Effective Date, before and after
     giving effect to this Agreement, as though made on and as of

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     such date (except for any such representation and warranty that, (i) by its
     terms, refers to a specific date other than the date first above written,
     in which case it shall be true and correct in all material respects as of
     such earlier date and (ii) the material inaccuracy of which in and of
     itself comprises a Specified Event of Default).

          (e) No Default or Event of Default shall have occurred and be
     continuing or shall occur after giving effect to this Agreement (other than
     the Specified Events of Default).

          (f) All of the accrued reasonable fees and expenses of the
     Administrative Agent (including the accrued reasonable fees and expenses of
     counsel for the Administrative Agent) in connection with this Agreement and
     the other Financing Documents shall have been paid in full.

The effectiveness of this Agreement is further conditioned upon the accuracy in
all material respects of all of the factual matters described herein. This
Agreement is subject to the provisions of Section 10.2 of the Credit Agreement.

          SECTION 5. REPRESENTATIONS AND WARRANTIES. To induce the
Administrative Agent and the Lenders to enter into this Agreement, the Company
hereby represents and warrants to the Administrative Agent and the Lenders:

          (a) The Company, each of its Subsidiaries and Flag Telecom Holdings,
     Ltd. (i) have the respective corporate power and authority to execute,
     deliver and perform this Agreement and the attached Consent, as applicable,
     and (ii) have taken all necessary corporate and other action to authorize
     the execution, delivery and performance of this Agreement and the attached
     Consent, as applicable, and the consummation of the transactions
     contemplated hereby.

          (b) The execution, delivery and performance by the Company, each of
     its Subsidiaries and Flag Telecom Holdings Ltd. of this Agreement and the
     attached Consent, as applicable, and the consummation of the transactions
     contemplated hereby and thereby (i) do not and will not violate or result
     in a breach of any Applicable Law or any judgment, order or decree of any
     court, arbitrator or other Governmental Authority, (ii) do not and will not
     violate any organizational document of the Company, any of its Subsidiaries
     or Flag Telecom Holdings Ltd., (iii) do not and will not violate or result
     in a default under any Contractual Obligation of the Company, any of its
     Subsidiaries or Flag Telecom Holdings Ltd and (iii) will not result in, or
     require, the creation or imposition of any Lien on any of the properties or
     revenues of the Company, any of its Subsidiaries, Flag Telecom Holdings
     Ltd. or the Project.

          (c) No consent or authorization of, filing with, notice to or other
     act by or in respect of, any Governmental Authority or any other Person is
     required in connection with this Agreement or the attached Consent or the
     execution, delivery, performance, validity or enforceability hereof.

          (d) This Agreement and the attached Consent have been duly executed
     and delivered on behalf of the Company, each of its Subsidiaries party
     thereto and Flag Telecom Holdings Ltd. This Agreement and the attached
     Consent, when executed, constitute a legal, valid and binding obligation of
     the Company, each of its Subsidiaries party thereto and Flag Telecom
     Holdings Ltd., enforceable against the Company, each such Subsidiary and
     Flag Telecom Holdings Ltd. in accordance with its terms, except as
     enforceability may be limited by applicable bankruptcy, insolvency,
     fraudulent conveyance, reorganization, moratorium and other similar laws
     affecting creditors' rights generally, general equitable principles
     (whether considered in a proceeding in equity or at law) and an implied
     covenant of good faith and fair dealing.

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          (e) The representations and warranties contained in this Section 5 and
     each of the Financing Documents are true and correct in all material
     respects on and as of the Effective Date, before and after giving effect to
     this Agreement, as though made on and as of such date (except for any such
     representation and warranty that, (i) by its terms, refers to a specific
     date other than the date first above written, in which case it shall be
     true and correct in all material respects as of such earlier date and (ii)
     the material inaccuracy of which in and of itself comprises a Specified
     Event of Default).

          (f) No Default or Event of Default has occurred and is continuing or
     will occur after giving effect to this Agreement (other than the Specified
     Events of Default).

          SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) On and
after the Effective Date, each reference in the Credit Agreement to "THIS
AGREEMENT"; "HEREUNDER", "HEREOF" or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the other
Financing Documents to "THE CREDIT AGREEMENT", "THEREUNDER", "THEREOF" or words
of like import referring to the Credit Agreement, shall mean and be a reference
to the Credit Agreement, as amended and otherwise modified hereby.

          (b) The Credit Agreement and each of the other Financing Documents, as
amended and otherwise modified by the amendments and modifications specifically
provided above, are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Agreement shall
not operate as a waiver of any right, power or remedy of the Administrative
Agent or any of the Lenders under any of the Financing Documents, nor constitute
a waiver of any provision of any of the Financing Documents.

          SECTION 7. COSTS AND EXPENSES. The Company hereby agrees to pay on
demand all reasonable costs and expenses of the Administrative Agent (including,
without limitation, the reasonable fees and expenses of counsel for the
Administrative Agent) in connection with the preparation, execution, delivery,
administration, amendment and modification of this Agreement and all of the
instruments, agreements and other documents delivered or to be delivered in
connection herewith, all in accordance with the terms of Section 10.3 of the
Credit Agreement.

          SECTION 8. NO DEFENSES, RELEASE. (a) Neither the Company nor any of
the other Obligors has any claims, counterclaims, offsets or defenses to the
Financing Documents or the Obligations, or if any such Person does have any
claims, counterclaims, offsets or defenses to the Financing Documents or the
Obligations, the same are hereby waived, relinquished and released in
consideration of the execution and delivery of this Agreement by the
Administrative Agent and the Lenders. By its execution hereof and in
consideration of the mutual covenants contained herein and the forbearance and
other accommodations granted to the Company hereunder, the Company, on behalf of
itself and each of the Subsidiaries of the Company party to any Financing
Document and its and their successors and assigns, hereby expressly forever
waives, releases and discharges any and all claims (including, without
limitation, cross-claims, counterclaims, rights of setoff and recoupment),
causes of actions, demands, suits, costs, expenses and damages (collectively,
the "CLAIMS") any of them may have or allege to have (and all defenses which may
arise out of any of the foregoing) of any nature, description or kind
whatsoever, whether known or unknown, whether now or hereafter arising, and
whether arising in law or at equity, against any or all of the Administrative
Agent and the Lenders and their respective affiliates, equityholders and
"controlling persons" (within the meaning of the United States federal
securities laws) and their respective successors and assigns and each and all of
the employees, directors, officers, attorneys, agents and other representatives
of each of the foregoing (collectively, the "RELEASED PARTIES"), based in whole
or in part on facts, whether or not known, up to and including the later of date

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first above written and the Effective Date. Acceptance by the Company of any
Loan, extension of credit under the Credit Agreement or other financial
accommodations made by the Administrative Agent or any Lender after the
Effective Date (including, without limitation, the accommodations contained in
this Agreement) shall constitute a ratification, adoption and confirmation by
the Company and the other Obligors of the foregoing general release of all
Claims against any Released Party which are based in whole or in part on the
facts, whether or not now known or unknown, existing on or prior to the date of
receipt of any such Loan, extension of credit or other financial accommodation.
In entering into this Agreement, the Company has consulted with and has been
represented by counsel and expressly disclaims any reliance on any
representations, acts or omissions by any of the Released Parties and hereby
agrees and acknowledges that the validity and effectiveness of the releases set
forth above does not depend in any way on any such representation, acts and/or
omissions or the accuracy, completeness or validity thereof. The provisions of
this Section 8 shall survive the termination of the Credit Agreement and the
other Financing Documents and payment in full of all Obligations and all other
amounts owing thereunder.

          (b) The Company and the other Obligors agree that, from and after the
later of the date first above written and the Effective Date, neither the
Company nor any other Obligor shall commence or prosecute any action, suit,
litigation or proceeding against any of the Released Parties to collect or
enforce any Claim.

          (c) The Company represents and warrants that it has not assigned to
any person, partnership, corporation or other entity any Claim. In the event
that the foregoing representation and warranty is, or is purported to be,
untrue, the Company agrees to indemnify and hold harmless the Released Parties
against, and to pay, any and all actions, demands, obligations, causes of
action, decrees, awards, claims, liabilities, losses and costs, (including, but
not limited to, reasonable expenses of investigation and fees and expenses of
counsel) that any of the Released Parties may sustain or incur as a result of
the breach or purported breach of the foregoing representation and warranty.

          SECTION 9. INTEGRATION; AMENDMENT. This Agreement sets forth in full
the terms of agreement between the parties with respect to the amendment,
forbearance and release described herein and is intended as the full, complete
and exclusive agreement governing the relationship between the parties with
respect to such forbearance and release. This Agreement supersedes all
discussions, promises, representations, warranties, agreements and
understandings between the parties with respect to the forbearance and release
described herein.

          SECTION 10. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of the Company, the Administrative Agent
and the Lenders and their respective successors and assigns. No Person other
than the parties hereto and any other Lender and, in the case of Section 8
hereof, the Released Parties shall have any rights hereunder or be entitled to
rely on this Agreement, and all third-party beneficiary rights (other than the
rights of the Released Parties under Section 8 hereof and any other Lender) are
hereby expressly disclaimed.

          SECTION 11. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

          SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                   FLAG ATLANTIC LIMITED

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   FLAG TELECOM HOLDINGS LTD.

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   BARCLAYS BANK PLC, as the Administrative
                                      Agent

                                   By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                   BARCLAYS BANK PLC
                                      as the Lead Arranger and a Lender

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

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                                   DRESDNER BANK AG, NEW YORK AND
                                      GRAND CAYMAN BRANCHES, as
                                      Documentation Agent and Lender

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   WESTDEUTSCHE LANDESBANK
                                      GIROZENTRALE, NEW YORK BRANCH, as
                                      Syndication Agent and a Lender

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   AUSTRALIA AND NEW ZEALAND BANKING
                                      GROUP LTD.

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       10
<Page>

                                   BANK OF SCOTLAND

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   CITY NATIONAL BANK

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                 CREDIT LYONNAIS

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                     DG BANK

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       11
<Page>

                                   ERSTE BANK DER OESTERRIECHISCHEN
                                      SPARKASSEN AG

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   GULF INTERNATIONAL BANK B.S.C.

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   BAYERISCHE HYPO-UND VEREINSBANK, AG,
                                      NEW YORK BRANCH

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       12
<Page>

                                   IKB DEUTSCHE INDUSTRIEBANK AG
                                      LUXEMBOURG BRANCH

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   KBC FINANCE IRELAND

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   LANDESBANK HESSAN-THURINGEN
                                      GIROZENTRALE

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       13
<Page>

                                   LANDESBANK SACHEN GIROZENTRALE

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   MITSUBISHI TRUST & BANKING CORP.

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   NIB CAPITAL BANK

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   RABOBANK INTERNATIONAL

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       14
<Page>

                                   RAIFFEISEN ZENTRALBANK OSTERREICH
                                      AKTIENGESELLSCHAFT

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   SOCIETE GENERALE

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   SUMITOMO BANK LIMITED

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   THE ROYAL BANK OF SCOTLAND PLC

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                       15<Page>

                                                                   EXHIBIT 10.32

    CONSENT TO THIRD AMENDMENT TO CREDIT AGREEMENT AND FORBEARANCE AGREEMENT

          Reference is made to (a) the Third Amendment to Credit Agreement and
Forbearance Agreement dated as of March 25, 2002 (the "AMENDMENT"; capitalized
terms not otherwise defined herein being used herein as defined in the Amendment
and in the Credit Agreement referred to therein), (b) the Credit Agreement dated
as of October 8, 1999 (as amended by the First Amendment to Credit Agreement and
Equity Contribution Agreements dated as of December 14, 1999 and the Second
Amendment to Credit Agreement dated as of November 16, 2000, the "CREDIT
AGREEMENT") among Flag Atlantic Limited, a company organized and existing under
the laws of Bermuda (the "COMPANY"), the banks and other financial institutions
party thereto (the "LENDERS"), Barclays Bank Plc, as the administrative agent
(in such capacity, the "ADMINISTRATIVE AGENT") for the Lenders, Dresdner Bank
AG, New York Branch, as the documentation agent, Westdeutsche Landesbank
Girozentrale, New York Branch, as the syndication agent and Barclays Capital,
the lead arranger and (c) the other Financing Documents referred to therein.

          Each of the undersigned, in its capacity as (a) a Guarantor under the
Subsidiary Guarantee Agreement in favor of the Secured Party for the
Beneficiaries (as such term is defined in the Subsidiary Guarantee Agreement)
and/or (b) a Grantor and/or Pledgor (as the case may be) under one or more of
the following (i) the Company Security Agreement (U.S.) in favor of the Secured
Party for the Lenders and Lender Counterparties (as such term is defined in the
Company Security Agreement (U.S.), (ii) the Subsidiary Debenture from Flag
Atlantic UK Limited in favor of the Administrative Agent, as trustee for the
Secured Parties (the "Subsidiary Debenture"), (iii) the Subsidiary Assignment
from Flag Atlantic France S.A.R.L. in favor of the Administrative Agent, as
trustee for the Secured Parties (the "SUBSIDIARY ASSIGNMENT"), (iv) the Charge
Over Bank Accounts from Flag Atlantic France S.A.R.L. in favor of the
Administrative Agent for the Secured Parties (the "CHARGE OVER BANK ACCOUNTS"),
(v) the Shareholder Pledge Agreement in favor of the Administrative Agent as
agent and representative of the Lenders and any Lender Counterparties (as
therein defined), and (vi) the Charge Over Business from Flag Atlantic France
S.A.R.L. in favor of the Administrative Agent for the Secured Parties (the
"Charge Over Business") hereby consents to the execution, delivery and
performance of the Amendment and confirms and agrees that:

          (A) each of the Subsidiary Guarantee Agreement, the Company Security
     Agreement (U.S.) , the Subsidiary Debenture, the Subsidiary Assignment, the
     Charge Over Bank Accounts, the Shareholder Pledge Agreement and the Charge
     Over Business and each of the other Financing Documents to which any of the
     undersigned is a party is, and shall continue to be, in full force and
     effect and is hereby in all respects ratified and confirmed on the
     Effective Date, except that, on and after the Effective Date, each
     reference to "THE CREDIT AGREEMENT", "THEREUNDER", "THEREOF", "THEREIN" or
     words of like import referring to the Credit Agreement shall mean and be a
     reference to the Credit Agreement, as amended and otherwise modified by the
     Amendment; and

          (B) as of the Effective Date, each of the Company Security Agreement
     (U.S.), the Subsidiary Debenture, the Subsidiary Assignment, the Charge
     Over Bank Accounts, the Shareholder Pledge Agreement and the Charge Over
     Business to which any of the undersigned is a party and all of the
     Collateral of such Person described therein does, and shall continue to,
     secure the payment of all of the Obligations.

          This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.

<Page>

          Delivery of an executed counterpart of a signature page of this
Consent by telecopier shall be effective as the delivery of a manually executed
counterpart of this Consent.

                                   FLAG ATLANTIC UK LIMITED

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title: Attorney-in-Fact

                                   FLAG ATLANTIC FRANCE S.A.R.L.

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title: Attorney-in-Fact

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title: Attorney-in-Fact

                                   FLAG ATLANTIC USA LIMITED

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title:

                                        2
<Page>

                                   FLAG ATLANTIC HOLDINGS LIMITED

                                   By
                                     -------------------------------------------
                                      Name:
                                      Title: Attorney-in-Fact

                                        3

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