A U.S. Bankruptcy Court has again put off hearing arguments from municipalities who believe they should be considered unsecured creditors of bankrupt MSO Adelphia Communications Corp.
The cities have asked the Bankruptcy Court for the Southern District of New York for the right to form a committee — separate from the unsecured creditors' committee — to represent all of Adelphia's local franchisors. Because the law considers localities to be entities, and not persons, they are not represented on the creditors' committee.
The cities previously petitioned case trustee Carolyn Schwartz with their request, but it was denied. The current unsecured creditors' committee represents the cities' interests, she wrote.
Schwartz also contended that the bankruptcy hasn't hurt the municipalities, noting that one of the court's first actions was to allow Adelphia to make good on its franchise-fee obligations to cities whose checks from the MSO had bounced.
But city officials said that since that opinion was issued, some municipalities have been told that Adelphia will not pay some of its public, educational and governmental channel commitments. Attorneys for the National Association of Telecommunications Officers and Advisors will note that shortfall when they again argue for standing, this time before the court.
A hearing on that argument has been postponed for the third time, said Matt Leibowitz, one of the attorneys representing the municipalities. It was first set for Oct. 9, then the week of Oct. 21.
Liebowitz saw the delay as positive. When the issue was first scheduled, municipal representatives were told they'd have five minutes to state their case. On the second rescheduled date, that was expanded to an hour.
Arguments have now been set for Nov. 7, and lawyers were told the city-standing issue is the only one on the docket.
But the delay has also allowed time for opponents to surface. The unsecured creditors' committee and individual creditors, such as Adelphia's lenders, will also state their case.