New York— There wasn’t a dry armpit on June 27 and 28 in courtroom 621 at U.S. Bankruptcy Court in Lower Manhattan, the site of two of the most important hearings in Adelphia Communications Corp.’s four-year bankruptcy saga on what seemed like two of the most humid days of the year. At least one attorney in the packed courtroom was overheard to comment on the locker room-like aroma building up in the cramped quarters.
Despite the stifling heat (78 degrees with 79% humidity on June 27 and 83 degrees with 64% humidity the next day, according to The Weather Channel), U.S. Bankruptcy Court Judge Robert Gerber managed to approve two key motions in the Adelphia bankruptcy: one that allows the sale of Adelphia to Time Warner Inc. and Comcast Corp. without creditor approval and the other a reorganization plan for two Adelphia joint ventures — Century-TCI and Parnassos.
With those two hurdles behind it, Adelphia has a clearer path to completing the $16.9 billion Time Warner-Comcast deal by the previously imposed July 31 deadline.
To get there, the judge had to first get officials from the states of Washington and California to set aside some complaints about whether or not they’d be paid sales tax until after the sale is completed. That took several hours.
Also on the first day, Gerber revealed that in separate hearings between Adelphia and some of its bondholders with Judge Cecelia Morris, one bondholder accused another of short selling the bonds of another constituent. That is a pretty serious charge, as the bondholders have been fighting over how much of the proceeds of the sale are allocated to each class of bonds.
In theory, a bondholder who is shorting another class of bonds — presumably the class that stands to get the most from the proceeds — could gain financially by delaying the deal as long as possible.
“That hasn’t yet been proven,” Gerber said of the shorting accusation. “But if it is ever shown to be true, that would be a matter of serious concern to me.”
And on the second day, Lawrence May, an attorney for several parties filing class-action lawsuits against some of Adelphia’s banks, objected to a line in the reorganization plan that released the banks from litigation claims. Adelphia said the release had no bearing on the bankruptcy case — the banks voted in favor of the plan and could not change their vote, whether they received the release or not.
Still, that didn’t stop May from spending at least two hours on the issue, including interruptions from Adelphia’s counsel, and lawyers for secured creditors, the banks, the equity committee, bondholder WR Huff Asset Management and JP Morgan Chase.
Finally, May summed up the futility of the matter in one simple phrase: “I’m not sure why we’re here.”
In his final decision on June 28, Gerber decided to save the release issue for another day.
