Adelphia equity security holders, creditors committees file objection to fifth amended reorganization plan

By Jennifer Lanning Drey

Eugene, Ore., Aug. 30 - Adelphia Communications Corp.'s official committee of equity security holders and its creditors committee filed an objection to the company's fifth amended plan of reorganization and related supplement to the fourth amended disclosure statement, Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

In the motion, the committees said the plan is uncomfirmable and "shows utter disregard for the rights of equity holders."

Specifically, the committees said the plan improperly tries to influence distribution of the $715 million restitution fund that is to be established by the government for victims of fraud at Adelphia.

In the plan, Adelphia seeks to divert the fund to its senior noteholders as part of its proposed global resolution of inter-creditor disputes. However, the fund is meant to be distributed at the government's sole discretion, the committees said in the filing.

"Essentially, [Adelphia] has now thrown the restitution fund into the mix of the inter-creditor disputes, treating it like just another negotiating chip to be used by them to curry favor with one group of noteholders or another," the committee said in the motion.

The committee also said the plan is not confirmable because it unfairly discriminates against holders of Adelphia common stock and preferred stock interests and other junior creditors by forcing them to vote for the plan, as proposed, in order to preserve their basic distributions or vote against the plan and receive nothing.

The plan provides that preferred stock and common stock interests will receive no distributions unless their class votes in favor of the plan, according to the motion.

In addition, the committee said the plan violates Adelphia's neutrality principal by taking a position on inter-creditor disputes.

The plan proposes a resolution that would guarantee recoveries to Arahova creditors that are "roughly equivalent to an absolute victory on all of the inter-creditor disputes," the committees said in the motion.

A hearing has been scheduled for Sept. 11.

Adelphia filed for bankruptcy on June 25, 2002. Its Chapter 11 case number is 02-41729.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.