Adelphia Communications Corp. has agreed to pay creditors $9.7 billion under a revised reorganization plan. According to the plan, which was filed with the U.S. Bankruptcy Court on Saturday, creditors will get an undisclosed number of Time Warner shares, Bloomberg reported.
In April, Adelphia agreed to sell most of its U.S. assets to Time Warner Inc. and Comcast Corp. in a deal valued at more than $17.5 billion. The payment included $12.7 billion in cash and 16 percent of the common stock of Time Warner Cable Inc., a Time Warner subsidiary.
Commenting on the second plan, which is subject to shareholder approval, Adelphia chairman and chief executive officer Bill Schleyer said: “This amended plan is another milestone in our bankruptcy process, but we still have significant work to do with all the relevant constituents.”
The plan was filed several days after Adelphia founder John Rigas was sentenced to 15 years in prison and his son, former CFO Timothy Rigas, was ordered to serve 20 years for their roles in the massive fraud that plunged the fifth-largest cable company into bankruptcy.
The revised plan reflects the deal made with Time Warner and Comcast. The prior reorganization plan, filed in February, described how Adelphia would emerge from bankruptcy with all of its businesses intact, Bloomberg explained.
“Creditors should be better off with the sale than they would have been without it,” Kevin Robbins, a former bankruptcy lawyer who represented creditors, told the wire service. “There will be more talks between the debtor and the creditors before this plan is put up for a vote. It’s a work in progress.”
Under the revised plan, Adelphia will fully repay all secured claims as well as holders of $544 million of Adelphia’s FrontierVision notes, while the Rigas family will get nothing, according to published accounts of the bankruptcy filing. The unsecured creditors’ share hasn’t yet been determined, according to Bloomberg.
Holders of Adelphia senior notes, who have filed more than $5.1 billion in claims, will receive an undisclosed number of Time Warner shares plus an undisclosed distribution from a holdback reserve, the wire service reported.