Adelphia Extends Chapter 11 Period10/13/2002 8:00 PM Eastern
Adelphia Communications Corp. last week asked the U.S. Bankruptcy Court for the Southern District of New York to extend the deadline for its reorganization plan by six months.
In a filing with the bankruptcy court on Monday, Adelphia said that the "sheer size and complexity" of the bankruptcy case warrants an extension.
Adelphia filed for Chapter 11 bankruptcy protection on June 25, listing assets of $24.6 billion and liabilities of $18.4 billion. According to bankruptcy law, debtors normally have 120 days from the date of an initial bankruptcy filing to submit an exclusive reorganization plan.
Using that deadline, Adelphia would have had to file its reorganization plan on Oct. 23. The most recent petition before the court would extend that date until April 21, 2003.
Extension requests are not uncommon in bankruptcy circles, and most companies that request extra time are granted it. By granting an extension, the court basically excludes other groups — including creditor committees — from submitting their own reorganization plans.
In the filing, Adelphia said that allowing other groups to submit their plans before Adelphia would lead to "a chaotic environment with no central focus."
The MSO added that allowing the extension would enable Adelphia to "harmonize the diverse and competing interests that exist and to attempt to resolve conflicts in a reasoned and balanced manner."
According to the filing, Adelphia has made significant progress in the past three months, including negotiating for $1.5 billion in debtor-in-possession financing; starting the process of analyzing agreements between the MSO and its competitive local-exchange carrier subsidiary, Adelphia Business Solutions (ABIZ); initiating a process to divest 14 of ABIZ's 17 CLEC markets to help cut costs; and negotiating with franchise authorities.
As important as those accomplishments are, "the road ahead has significant challenges," Adelphia said in the filing.
"To this end, the debtors [Adelphia] are in the process of developing and refining a long-term budget and business model that will serve as a guide for the structure and operational decisions that will undergird the debtors' long-range business plan," the filing stated.
In the meantime, Adelphia continues to face numerous legal and operational issues, including matters involving franchise law, construction, bonding, licensing and programming.
As a result, the company said that the normal disruptions associated with Chapter 11 filings has been "drastically magnified."
Legal fees ok'd
In other news, the court approved a petition by attorneys for certain Adelphia directors to have the company pay their legal fees.
According to an order released Oct. 8, the court allowed for legal fees for Adelphia board member Peter Metros, not to exceed $55,000, to be paid by the company. The court also authorized Adelphia to pay up to $1 million for legal fees for "cooperating employees." None of those employees were named.
According to the document, the money will be used to pay for the defense of Adelphia executives named in civil suits against the company, as well as a Securities and Exchange Commission civil suit filed against Adelphia in July.
But executives named in criminal indictments or named as defendants in a lawsuit brought by Adelphia itself — such as former executives John Rigas, Michael Rigas, Timothy Rigas, James Brown and Michael Mulcahey — are not entitled to the funds.
The Rigases, Brown and Mulcahey pleaded innocent to federal charges of conspiracy, securities fraud, wire fraud and bank fraud on Oct. 2.