Adelphia Gets Initial Approval for Settlement

May 18, 2005  •  Post A Comment

The legal troubles swirling around bankrupt cable operator Adelphia Communications moved one step closer to resolution Wednesday when a federal judge approved a $715 million settlement related to the accounting scandal involving the founding Rigas family.

The approval is one of three needed before Adelphia can close the book on a scandal that led to the company’s filing for bankruptcy protection in 2002, last year’s conviction of two members of the Rigas family — Adelphia founder John Rigas and his son, former Adelphia Chief Financial Officer Timothy — and the pending retrial, scheduled for October, of a third member of the Rigas family, son Michael Rigas.

John and Timothy Rigas are expected to be sentenced June 1.

Adelphia is also awaiting approval from the federal bankruptcy court that handled its case, and from a second federal judge who handled the civil charges brought forth by the Securities and Exchange Commission. The bankruptcy court is expected to rule on the settlement Thursday.

In addition to the $715 million settlement, the Rigas family agreed to hand over $1.5 billion in assets obtained as a result of the accounting fraud, and agreed to give up family-owned cable systems that had been managed by Adelphia. Proceeds from the settlement will go toward compensating investors hurt by the malfeasance.

Settling Adelphia’s legal issues is a key step toward the completion of a pending $17.6 billion transaction that has Comcast and Time Warner acquiring Adelphia.