First, city officials were alarmed when their franchise-fee checks from
Adelphia Communications Corp. bounced in the spring.
Now they are angry at the receipt of letters from the bankrupt company
notifying them that the operator will not pay some of its PEG-access (public,
educational and government) payments dating back to the beginning of the
Letters starting arriving in city mailboxes the week of Sept. 17, stating
that the bankruptcy precluded the company from paying such contractual
obligations as PEG matching funds or capital support.
The letter covers the period from Jan. 1 through late June, when the company
filed for Chapter 11 bankruptcy protection.
The bankruptcy's automatic stay enjoins all entities from suing Adelphia or
seizing property to make good on the debt, the letters advised.
Municipal attorneys said they are still examining their options in light of
the Adelphia action.
Some said they are confused as to why the operator would apply to the
bankruptcy court for funding of one business expense (franchise-fee payments,
including making good on the checks that bounced), yet claim it is unable to pay
In some franchises, PEG is a side agreement with a separate contract to a
nonprofit corporation. But in most, the community-channel obligations are part
of the overall franchise pact.
Attorneys said they are drafting notices to cure and may find Adelphia in
material breach of some of its franchises if it refuses to pay PEG