Adelphia Submits Revised Reorganization Plan

Jun 27, 2005  •  Post A Comment

Adelphia Communications, the bankrupt cable operator that agreed in April to be sold to Time Warner and Comcast, proposed over the weekend to pay $9 billion in cash to creditors as part of a revised bankruptcy reorganization plan.

In addition to the cash payment, some creditors would receive Time Warner shares as part of the settlement. Adelphia submitted the plan to the U.S. bankruptcy court Saturday in New York-exactly three years after it filed for bankruptcy protection.

The plan calls for holders of secured claims to be repaid in full. The same would go for holders of certain Adelphia notes. Unsecured debtholders would receive some Time Warner shares, though the company declined to say how many. Unsecured debtholders have filed more than $5.1 billion in claims against the company.

Despite having a reorganization plan in place, Adelphia acknowledged it isn’t out of the woods. The company said it still expects to hold “significant negotiations” with creditors, and warned that material changes to the proposal submitted this past weekend could take place.

The new reorganization plan comes less than a week after Adelphia’s founder, 80-year-old John Rigas, was sentenced to 15 years in prison for his role in bilking the company to finance a lavish lifestyle and for lying to investors about the financial health of the company. Mr. Rigas’ son Timothy, the former chief financial officer, was sentenced to 20 years.