After more than four years in what has often been a contentious battle, Adelphia Communications said late Monday that it has reached agreement with at least some of its dissident bondholders, bringing the cable company a step closer to shutting the books once and for all on its bankruptcy saga.
Adelphia -- which filed for Chapter 11 bankruptcy protection in June 2002 -- already agreed to sell its assets for $16.9 billion in cash and stock to Time Warner Inc. and Comcast. The creditor agreement will not affect the sale, which is expected to close July 31.
The latest development centers on the distribution of the money that will come in from the asset sale. According to Adelphia, several of its bondholders, unsecured creditors and several individual creditors have agreed to a distribution formula. Its pre-petition bank lenders and some bondholders have not signed off on the agreement.
Nevertheless, Adelphia believes it has enough consensus to issue yet another plan of reorganization -- this will be its fifth -- to let the bankruptcy go through. U.S. Bankruptcy Court Judge Robert Gerber still has to approve the agreement.
Adelphia did not give details as to how much each class of debtors will receive in the distribution, but the company said in a prepared statement that roughly $1.08 billion will be distributed. The agreement is contingent on the asset sale to Time Warner and Comcast being consummated.
“This agreement will help pave the way toward a new, modified plan of reorganization that will be subject to court approval, and we're pleased that after lengthy negotiations, a significant majority of our unsecured creditors are satisfied with the outcome and supportive of this settlement,” Adelphia chairman and CEO William Schleyer said in a prepared statement.
Adelphia hopes to complete the bankruptcy sometime in the fourth quarter.
According to the agreement -- filed with the Securities and Exchange Commission late Monday -- the $1.08 billion will come from amounts that were previously earmarked for some creditors. Those creditors will be able to reclaim some of those “give-ups” from litigation they have pending against Adelphia’s former banks and its accounting firm, Deloitte & Touche.
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