A Federal Bankruptcy Court judge has approved the debtor repayment plan of Adelphia--which has since been divvied up between Time Warner and Comcast--to dole out $10.7 billion of the $12.7 billion it owes.
Pointing out that represents 84% of the outstanding claims against the company, Judge Robert E. Gerber in a 267-page ruling, said it was in the public interest to approve the plan. He also pointed out that 30 of 30 classes of creditors had voted for the plan, saying that helped him make the decision.
It is the seventh such plan, and the judge said it was finally the right one. The money to repay the debt comes from the $17.6 billion that Time Warner and Comcast ponied up for the company's cable systems.
Adelphia was the fifth largest cable system in the country in 2002 when its accounting irregularities and the borrowing activities of the family of founder John Rigas blew up into a scandal that rocked the cable industry.
The company was forced into bankruptcy when the capital markets were closed to it pending various investigations, then was sold off to its competitors, in part to help customers whose service suffered while the company focused on its mounting legal troubles.
The Rigas family settled one fraud investigation by ponying up over $700 million, but other charges led to the arrest and conviction of Rigas and son, Tim, in June 2005 on 18 counts of securities fraud, bank fraud and conspiracy.
For a timeline of Adelphia's complicated restructuring, click here.
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Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.
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